Play the Game of Life

Upcoming NYC Networking Events

2009-01-30T05:39:00.002+08:00

Courtesy of my friend Alan:

Networking:

· 1/29 6:30 PM: Young Alumni Happy Hour at Uris Hall at Columbia University (3022 Broadway) http://www.facebook.com/event.php?eid=126907980018

· 1/29 10:00 PM: SIPA EPD Winter Ball at Touch NYC (240 W 52^nd Street) http://www.facebook.com/event.php?eid=50141040665

· 1/30 6:00 PM: Class of 2008 Happy Hour at Buddha Bar (25 Little West 12th Street) http://www.facebook.com/event.php?eid=72337511223

· 2/1 5:00 PM: Professionals in the City Super Bowl Party at Alibi Lounge (116 MacDougal Street) http://www.prosinthecity.com/index.cfm?cityid=5&action=events&eventid=7342#Event7342

· 2/3 6:30 PM: High Speed Networking at O’Lunney’s Times Square Pub (145 W 45^th Street [between Broadway & 6^th Avenue]) http://www.networkingforprofessionals.com/eventlistings.php?id=269

· 2/4 5:30 PM: Wall Street Pink Slip Party at Public House (140 E 41^st Street [between Lexington and Third Avenue]) http://www.wallstreetpinkslip.com/

· 2/6 7:30 PM: East Side Entrepreneur and Professional After-Work Networking Party at the Pourhouse (64 3^rd Avenue at 11^th Street) http://www.prosinthecity.com/index.cfm?cityid=5&action=events&eventid=7342#Event7342

· 2/9 7:00 PM: Green Business Competition Launch Party at 92Y Tribeca (200 Hudson Street near Canal Street) http://greenbusinesscompetition.com/launch-party/

· 2/10 6:00 PM: Green Drinks Winter Wonderland Cruise at the Queen of Hearts cruise boat at Pier 40 (W. Houston St. & West St.) http://www.greendrinksnyc.com/events.aspx

· 2/10 6:00 PM: Shakers & Stirrers at Stone Creek (140 E 27^th Street [between Lexington and Third Avenue]) http://www.networkingforprofessionals.com/eventlistings.php?id=269

· 2/12 6:00 PM: “Valentine’s Day Cocktail Party” at Ideya Latin Bistro (349 West Broadway) http://www.cbsacny.org/article.html?aid=677

· 2/17 6:00 PM: Web2NewYork “networking party for post-internet media, advertising and business” at the Gallery Bar (120 Orchard Street) http://www.web2newyork.com/

· 2/17 6:30 PM: “Industry Networking Series: Entrepreneurship and Marketing” – RSVP on the Columbia Alumni Events site or email Jennifer Aaron ja2409@columbia.edu

· 2/18 6:00 PM: “Industry Networking Series: Healthcare” at the New York Marriott Marquis (1535 Broadway [between 45th and 46th Street]) – RSVP on the Columbia Alumni Events site or email Jennifer Aaron ja2409@columbia.edu

Conferences

· 1/30: Columbia Business School Private Equity/Venture Capital Conference at Lerner Hall at Columbia University (2920 Broadway at W 115^th) http://www.cbspevcconference.com/

· 1/31: Harvard Business School Venture Capital/Private Equity Conference at Spangler Hall of Harvard University (Boston, MA) http://www.hbsvcpeconference.com/

· 2/5 6:30 PM: Fifth Annual Columbia Business School Restructuring Event at the University Club (1 W 54^th Street) – RSVP on the Columbia Alumni Events site or email Vivian Ginorio vmg2115@columbia.edu

· 2/6: 4th Annual Tuck Private Equity and Growth Ventures Conference at the Center for Private Equity and Entrepreneurship at Tuck School of Business at Dartmouth (100 Tuck Hall, Hanover, NH) http://mba.tuck.dartmouth.edu/pecenter/events/calendar/feb.html

· 2/12: DBR Turnaround & Restructuring Summit at Bridgewaters (11 Fulton Street) http://dbrsummit.dowjones.com/

· 2/23-2/25: Water Investment World at Bridgewaters (11 Fulton Street) http://www.terrapinn.com/2009/waterworld/

· 2/26: VC Outlook ’09 at Goodwin Proctor LLP (620 Eighth Avenue [between 40^th & 41^st Street]) http://www.youngstartup.com/VC-Outlook09/index.php

· 2/27: MBA Media & Entertainment Conference at Lerner Hall at Columbia University (2920 Broadway at W 115^th) http://www.mbamec.com/

· 3/5: 2009 National Venture Summit & Growth Capital Forum at the Grand Ballroom of the Yale Club (50 Vanderbilt Avenue) http://www.privateequityforums.com/

Misc.

· 2/5 6:30 PM: “2009 Executive Search Panel: Industry Truths, Trends and Tips for An Effective Job Search” at Warren Hall (1125 Amsterdam Avenue) – RSVP on the Columbia Alumni Events site or email Alexandra Dreyer ad2115@columbia.edu

· 2/5 6:30 PM: “Starting & Running a Business in a Turbulent Economy” at the Henry Kaufman Management Building of New York University (44 West Fourth Street) http://jewishentrepreneurs.org/index.php

· 2/7 8:00 AM: “Career Transition in a Changing Economy: A Proactive Approach” with Ellis Chase at Hepburn & Calder Lounge in Uris Hall of Columbia University (3022 Broadway) - RSVP on the Columbia Alumni Events site or email Alexandra Dreyer ad2115@columbia.edu

· 2/7 10:00 AM: “Go Green, Get Green Seminar Series” at Ripley Grier Studios. For more information contact 212.729.7785 or e-mail osiris@urbangogreen.com. Sponsored by Green Drinks NYC.

· 2/11 6:30 PM: “Leadership and Personal Transformation with Professor Srikumar Rao” at the Marriott East Side 545 Lexington Avenue at 49^th Street – RSVP on the Columbia Alumni Events site or email Vivian Ginorio vmg2115@columbia.edu

· 2/12 10:00 AM: “Political Climate Change: A Forum about New Policies, Resources and Programs to Retrofit NYC” at Room 213 in the Pratt Center Manhattan (144 W 14th Street [6th-7th Avenues]) http://www.prattcenter.net/pubs/Event-Political_Climate_Change.pdf

· 2/17 6:30 PM: MediaBistro Personal Essay Workshop http://www.mediabistro.com/courses/cache/crs4373.asp?c=mbencrsepro

· 2/18 6:30 PM: Social Enterprise Program Alumni Reception at Low Library at Columbia University (535 W 116^th Street) -
www.gsb.columbia.edu/socialenterprise/rsvp or email Paige Minor pm2157@columbia.edu

· 2/25 6:00 PM: “The C.E.O. Series: How Green Technology Will Resuscitate the American Economy” at Alston & Bird LLP (90 Park Avenue, 14th floor [between 39th and 40th on Park]) http://www.cbsacny.org/article.html?aid=680

· 2/26 6:30 PM: Economic Gangsters with Ray Fisman at the Marriott East Side 545 Lexington Avenue at 49^th Street – RSVP on the Columbia Alumni Events site or email Vivian Ginorio vmg2115@columbia.edu

Book Review: Mayflower by Nathaniel Philbrick

2009-01-29T09:06:00.003+08:00

Mayflower is the story of the twisted, delusional religious fanatics that "founded" our country at Plymouth, Mass. As it turns out, they literally built their first colony on the ruins of a once-thriving Indian village that had been completely annihilated by European-introduced disease during the previous few years. Europeans had been fishing for cod off the coast of Massachussets for many years, and at some point the natives of the region were exposed to one or more of the many diseases native to Europe to which they had no immunity.

Prior to their flight to the Americas, the Pilgrims had already fled England for Holland, where they were more free to practice their own version of Christianity focused on a more literal interpretation of the bible. Before long they realized that there was serious risk that they would be reached there by the long arm of the Catholic inquisition, and decided it was best to try to create their own religious Utopia in the Americas. Their vision was decidely NOT to create a place where each person would be free to worship as they saw fit, but rather a place where all would worship according to the interpretation of the bible that the group held in common.

Interestingly their fate was nearly doomed by a con-man of sorts who sold them a crappy ship, the Speedwell (I think). They were going to use this for fishing off the coast after the Mayflower returned without them. The captain of the ship had the boat outfitted with a longer mast and bigger sails, which seemed like a good idea to the land-lubbing pilgrims making their first crossing of the Atlantic. But as it turned out, this put more pressure on the hull than it was designed to withstand, so the boat started leaking and they had to leave it behind. The captain promptly arranged a deal to buy it back on the cheap, swapped out the sails and continued to sail the ship for many years afterwards.

As it turned out, the Pilgrims really needed that fishing vessel, as more than half of them would die from starvation and disease during the first year. All while just off the coast lay one of the most bountiful cod fisheries on the planet. Ooops.

Squanto is perhaps the most interesting character in the story. He was actually kidnapped and brought back to London by an earlier European expedition to the region. He spent some time in England, long enough to learn English, before returning to the Americas. Upon arrival he discovered that his entire village (the one where the Pilgirms would later settle) had been decimated by disease. With all of his family and friends now dead, he took to translating for the various fisherman and explorers that stopped on the coast.

Ultimately Squanto would try to play the Pilgrims against the many native tribes in the area in a powerplay that if successful might have made him the most powerful chief in the region--not bad for a guy with no family or friends. Unfortunately he was found out and it seems he may have been poisoned by the local strongman he tried to betray (whose name (Massasoit?) is sadly too hard for me to remember without opening the book, something I refuse to do when writing reviews for this blog).

At any rate, Squanto basically saved the Pilgrim's from certain death during those first few years. Although more than 1/2 would die during the first year, he seems to have single-handedly provided the others with food, convinced hostile tribes to leave them be, and generally saved the mother f*&?ing day.

Seriously, can you imagine your good luck to show up in the middle of Massachussets winter with no food and very limited supplies and suddenly meet this woodsman who not only knows how to catch every kind of fish, identify all the food crops, but also speaks your language fluently?

If it wasn't for the fact that they almost all died, I would say that God must have really been on their side.

The book itself makes a pretty good read, especially the earlier chapters while the Pilgrims are still bungling things and making war with some of the local tribes for no apparent reason.

I also really liked this one character (forget his name, this time because it was too commonplace) who came a few years after the Pilgrims and went off on his own because he thought they were a bunch of religious loonies. He ended up making friends with all the Indians, so whenever the pilgrims went to visit him he was having these awesome dance parties around the enormous maypole he built (that's how i remember it anyways). Not suprisingly given these friendships, he soon became the leading fur trader in the area--nothing changes, everybody likes to do business with people they like.

Well, the Pilgrims and Puritans (those who founded Boston not long after) decided this guy was just having way too much fun, so they cooked up some crimes against the Lord that he must have committed and brought him in for justice. Sad, because people like that actually had a chance of creating a society where people of different races and religous views were tolerated, something we wouldn't achieve again for a few hundred years, if ever.

Review of "Moneyball" by Michael Lewis

2009-01-29T08:29:00.003+08:00

This book is like five years old, and I'm not sure I have much to add to the volumes that have already been written. It was a highly successful and somewhat controversial book, so others more skillful than myself have already taken a critical pen to the issue. But I decided tonight that I'm going to review all of the books I read in 2009, so why not start here.

Moneyball is the story of huge inefficiencies in the market for professional baseball talent--and the Oakland A's quest to systematically exploit these using modern statistical methods. In doing so, Billy Beane's club managed to build one of the dominant teams in the major leagues with one of the smallest payrolls in baseball. Amazingly the other general managers around the league chose to write his success of to luck--even, it turns out, after Lewis had revealed his methods. It appears that many GMs around the league would actually brag about NOT having read this book.

I'm not a baseball fan anymore--haven't been since about 10th grade when I retired from the game--but this is really interesting story about what happens when an organization (or series organizations, as the case may be) willfully shuts itself off from criticism and outside knowledge. It's also a story about how self-examination and reliance on hard data to drive decisions can lead to outstanding success. That and Lewis' ability to develop characters and weave them together into a compelling story make Moneyball a fabulous read for people, like me, who think baseball is boring.

Charlie Rose interviews Bill Gates on search, online video, web apps, etc.

2009-01-05T03:44:00.002+08:00

The video's an hour long, so watch what you have time for. The part about the future of search and need for a second competitor in that space is insightful and, I think, spot on.

Via the Big Picture: http://www.ritholtz.com/blog/2009/01/an-hour-with-bill-gates/

Follow me on Twitter

2008-12-29T23:35:00.003+08:00

For the blog posts I don't have time to write.

Year in Review: Books for 2008

2008-12-29T12:18:00.005+08:00

A quick list of the books I read in 2008 as reconstructed from my Amazon order history and my (rather foggy) memory:

Stumbling on Happiness
The Omnivore's Dilemma
Getting Things Done
The Stuff of Thought: Language as a Window into Human Nature
The Moral Animal: Why We Are, the Way We Are: The New Science of Evolutionary Psychology
Atlas Shrugged
The Richest Man in Babylon
The Power and the Glory
Man's Search for Meaning
The Black Swan
Buffett: The Making of an American Capitalist
The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts
The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations
Bit Literacy: Productivity in the Age of Information and E-mail Overload
Mindset: The New Psychology of Success
The Web of Life: A New Scientific Understanding of Living Systems
What Are You Optimistic About?: Today's Leading Thinkers on Why Things Are Good and Getting Better
Growing Pains: Transitioning from an Entrepreneurship to a Professionally Managed Firm
Lucky or Smart? Secrets to an Entrepreneurial Life
The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World
The World of Gerard Mercator
Once they Moved Like the Wind
The Intelligent Investor

Mint.com Trends Data Flat Out Wrong

2008-12-12T07:25:00.003+08:00

Earlier this month I authored a post raving about Mint.com's real-time shopping data for U.S. consumers. At that time it looked like discretionary consumer spending at fallen off a cliff in October, down as much as 40% in important categories.

Checking back now, its clear they have updated the older data, as October no appears to be off only slightly from Septemer. Meanwhile, November now looks like it's fallen off an even steeper cliff. In other words, this data can't be trusted at all.

This appears to be a function of how Mint.com updates its data--that is, they only download new data from the banks when a user actually signs in. So if users only sign in once per month, there will be a lag in collecting that data. The system should be smart enough not to include that information in its averages, of course.

Google Starts Running "Get Rich Quick" Ads Against the Financial Crisis

2008-11-20T04:59:00.003+08:00

Worried about the financial crisis' effects on its bottom line, Google has decided to run an all-out blitz of advertising, with new units appearing on YouTube, Google Images and now Google Finance.

The ads Google is running against its financial information site are almost entirely made up of stock scams and get-rich-quick schemes. Will selling these scams to other investors help Google turn its own stock chart around? I doubt it...

Spontaneous Obama Victory Rally in Manhattan's East Village

2008-11-06T01:53:00.003+08:00

Last night the East Village just came alive for Obama: Every cab driver honked his horn as loud as he could for hours; Impromptu dance parties broke out on all the street corners; High fives all around!

As the clock rolled past midnight, these small groups began to coalesce into several large block parties in the Lower East Side and the East Village. Here are two videos from one of these celebrations, around 2:30 am on St. Mark's street, just west of Tompkin's Square park.

Mint.com Data Reveals Extreme Severity of October's Slow-Down in Discretionary Consumer Spending

2008-11-05T09:44:00.004+08:00

This post is not so much an economic analysis, as a review of a very interesting new source of economic data: the benchmarking tools provided tools by personal finance Web site Mint.com. In exchange for access to cutting edge expense tracking, budgeting and online finance tools, Mint's users provide the site with direct access too all their personal banking and investment accounts.

One of the tools that Mint offers allows you to compare your own spending habits with other Mint.com users in your area or nationwide.

These data reveal a severe collapse in consumer spending during October, to an extent that may have gone under reported in the media. Retail sales figures for September, which were only just released, have the L.A. times predicting gloom and doom. But according to Mint.com's data--accessed directly from the bank, credit card, and investment accounts of more than a million users--spending on "shopping" fell another 33% in October.

Users of the site across the United States spent an average of $686 on "Shopping" in Septembe, compared with just $456 in October. The site's data for November show that spending appears to have recovered, but how many businesses are really prepared for a 30% decline in revenue? Anybody loaded up with a lot of debt in a recent private equity transaction may be headed for trouble. And now is not the right time to try to borrow more money just to keep yourself afloat.

To see the Mint.com data for yourself, simply visit the site, sign up for a free account, then click on the Trends tab. Scroll to the bottom of that page to see the spending habits of Mint.com useres in the different regions. These data provide phenomenal economic insights.

Users of a site like this may tend to be young and maybe somewhat financially conservative (they are tracking all their expenses online, after all). What other sampling biases might built into the site's data? How would these biases skew the data?

Critique of a Hedge Fund Manager's Gloating Good Bye Letter

2008-10-30T22:14:00.004+08:00

When I first read this letter from now-retired hedge fund manager, Andrew Lahde, I really admired him for putting his personal life above financial payouts as he rode off into the sunset after a miraculous year of investing. The guy's hedge fund rose 866% last year, leading him to write a scathing letter about the financial services industry (you'd think he'd be more grateful) as he retired from money management.

And while I still recommend reading the letter, and wholeheartedly endorse the sentiment that lead him to write it, I think this guy has been fooled by randomness. Here is a classic example of a guy who got lucky, and not realizing that somebody had to get lucky, clings to the belief that he is somehow special.

On top of that, the guy's actually pretty petty. He attacks everybody who went to an elite school, saying they are all stupid. Then he tells the world--presumably including friends and co-workers who helped him on the way up--that now that he's rich he won't be returning their calls).

Let's hope that when the rest of us make it big, we can make a more graceful move to the exit.

Marketing to the Elderly Online

2008-10-24T00:33:00.009+08:00

Everyday Medical, a distributor of discounted wheelchairs and medical supplies, presents a really interesting case study in the opportunities and challenges of marketing to an older demographic on the Internet.

The company is growing tremendously thanks to an easy-to-use site, well-managed online advertising campaigns, and a customer service-oriented culture. To get elderly people to shop online, you need to convince them that you're trustworthy, and that starts with telephone support that shows you care. These guys have become masters of the art.

Nonetheless, many elderly people remain uncomfortable with the online shopping experience. Even where the exact products they want are available at steep discounts from online distributors, many prefer the more personalized shopping experience of their local retailer.

The problem is likely to diminish with time, as today's younger, more web savvy people become tomorrow's elderly generation. But there must be certain steps a company can take to increase speed of the transition.

A few things they've done so far include providing a vastly greater selection of wheelchairs and other medical products than any pharmacy could hope to stock. They also provide better prices while making every effort to match the customer service experience of in-store shopping.

They've also implemented online chat with Live Person, rapid e-mail support, and most importantly, hired truly caring phone support people to represent the company.

* What other steps can companies take to convince older folks to start shopping online?

* Are there other tools you could add to an e-commerce site to make it more friendly to the elderly?

If you have any ideas, let us know in the comments section.

Tais Ties - Japanese Mafia-inspired neckties for guys who don't like ties

2008-09-25T20:59:00.008+08:00

By far my coolest friend has recently conceived and launched Tais Ties, a Yakuza-inspired line of neckties.

We actually started working on this project together 15 months ago, but I soon realized the fashion world was my outside domain of expertise and resigned. My friend--he prefers to remain anonymous so the brand will have little more mystery--was so passionate about this project that he never thought about letting it go after I stepped off to the side.

He's since developed a whole series of extremely high quality ties, each designed to represent a different aspect of Japanese mafia culture. He's having them hand produced right here in Manhattan by the same small shop that makes ties for some of the world's most famous necktie lines. A few weeks ago he launched a gorgeous e-commerce site at www.taisties.com, he's starting to get awesome reviews from people that matter in that world. And word is, he's already begun making some serious sales.

I just bought my second tie from the company. The first I got just to support his project, I'll admit. But after the first day I actually wore it, I realized that these funky designer neckties actually make you feel like you have some fashion sense, instead of just being a another boring goon in a tie.

When I handed back my 50% of the equity, I knew I might someday regret it, when the brand was worth $100 million and he was surrounded by runway models all the time. Turns out I regret it already, and I don't know if he's even made a profit yet.

If you want to get one, e-mail me for the online discount code... I recommend the "Dirty Business" tie.

An Open Challenge

2008-09-11T06:26:00.002+08:00

Try and top this...

First Try:

106

Created by OnePlusYou - Free Dating Site

Second Try:

123

Created by OnePlusYou - Free Dating

Columbia Kayaking Club Gets a New Website

2008-07-22T01:40:00.005+08:00

Check out the new Columbia Kayaking Club web site for pics and video (coming soon) from our kayaking trips. The club is open to all students, faculty, alumni and staff of Columbia University.

No Company Should be This Big...

2008-06-25T01:50:00.003+08:00

I have a student loan from Citibank. Everyday they have this automated lady calling me saying "We're sorry we are not able to talk to you personally, please call 800 967 6080. This is not a sales call."

They don't mention why I should call this number. When I call, I get an automated menu asking me to make a choice between a number of options. But of course, I don't know which option to choose because I don't know why I'm calling in the first place!

I hereby vow that no company I run will ever get so big that we have an automated machine calling our customers.

In Citibank's case, its somewhat understandable since they have me locked in on a fifteen-year repayment plan for my loans. It's not very easy for me to just drop them. But still, they could at least have an automated system that tells you what you are supposed to do when you call back into their other automated system!

Top 100 Management / Business Blogs

2008-06-12T06:42:00.004+08:00

We're ranked #82 in HR World's list of the top 100 management blogs. I don't think its in order from best to worse, but if it is, the female bloggers of the world need to stand up for themselves!

ImportGenius.com Covered in Washington Post Today

2008-05-29T21:55:00.002+08:00

Our search engine for international trade records received a glowing review on TechCrunch which was picked up by the Washington Post today.

Columbia Kayaking Club

2008-05-02T22:48:00.003+08:00

Columbia's Kayaking Club needs a few new undergraduate members to keep us going as an official club (actually, to reinstate us since we've been been banished for falling below the "4 undergrad officer" minimum). If you're a Columbia College student, please e-mail me to find out how to get involved. Grad students and alumni are welcome too, of course. There is a class for beginners and one for intermediates in Uris Pool during the Spring/Fall semesters.

Here's some videos from last weekend's trip to the Deerfield River, in the Berkshires (NW Mass).

This one's me, just good enough to be a hazard on the river...

U.S. Customs Database Reveals Trade Secrets

2008-05-01T23:49:00.006+08:00

Import Genius is a Web application that allows you to search international trade records to find out where your competitors are buying their products overseas, as well as where your overseas suppliers are selling in the U.S. The company charges a monthly subscription service to businesses that want to access the customs database. I just took a job with the firm and started working this week, so if you are interested in accessing these kinds of reports, let me know.

Out of Control By Design

2008-04-05T03:00:00.011+08:00

Building the Virtual Networked Business Models of the Future

(this was supposed to be a 2-page paper for a class on Managing Growth. I wrote 9 before I caught my breath)

by Ryan Petersen
Columbia Business School
MBA Class of 2008

Your customers are in control. The Web has taught them they can get whatever they want, exactly the way they want it, when they want it. And they want it NOW. Tomorrow is too late.

Customers "pulling" the specific products they want represents a radical departure from economic models of the past. Since the dawn of the industrial revolution, corporations have been in the business of producing huge quantities of product X and then "pushing" that product to customers through expensive sales and marketing efforts. Everything about today's organizational structures was designed to serve this model.

Economies of scale were king in the push economy: Huge factories pumped out standardized products as cheaply as possible; broad retail distribution networks put products in front of consumers wherever they shopped; marketing departments created print, television and radio advertisements to interrupt customers with their messaging; sales people knocked on doors and made phone calls to do the same; and MBAs were hired to optimize the entire process.

These organizational structures have not always been with us, however. Rather, they emerged in response to economic paradigm shifts of the past. Thomas McCraw, author of Creating Modern Capitalism, has identified three distinct industrial revolutions. The first arrived with the advent of steam and water power in the 17th and 18th centuries. Business ceased being a family affair as companies organized machines under the roofs of ever-larger factories, filled with hundreds or thousands of employees.

The second industrial revolution came about with the rise of electric utilities in the early 20th century. No longer requiring their own generators, factories could situate themselves closer to customers and labor supplies. Organizations adapted to the economics of cheap, plentiful power by organizing themselves around the assembly line, resulting in a dramatic productivity gains.

The third industrial revolution came about with the rise of mass communications and containerization in the aftermath of World War II. By spending huge amounts on television, radio and print advertisements, companies found they could create demand for the standardized products they churned out en masse. Successful firms began to organize around brands and global distribution networks. Those who were too slow to embrace the trends of branding and globalization quickly became inconsequential.

To execute global strategies behind standardized brands, companies needed new mechanisms of control. Much like the human body, businesses have traditionally organized around a central nervous system (the c-suite) that disseminates market intelligence and commands down to the corporation's muscles (line employees). To a greater or lesser degree, decisions are made at the top and executed at the bottom.

In Growing Pains, Eric Flamholtz and Yvonne Randle, identify three pure forms of organizational structure that have thrived in the push economy: (1) the functional structure, (2) the divisional structure, and (3) the matrix structure (Flamholtz, 190). To greater or lesser degrees, each of these structures greatly enhances top management's ability to control an organization.

Indeed, the central theme of Flamholtz and Randle's work on organizational structures is the need for managers to wield control. In this classical view, rational analysis by highly trained managers is the best way to allocate a firm's resources. Meanwhile, their arguments against more market-centric approaches like those found in the matrix organization center on the difficulty of coordination. Yet the rise of the empowered consumer demands that we push control all the way to the bottom--indeed, even outside the organization into the hands of customers, suppliers and other stakeholders. To do this, we need structures that provide for increased collaboration even at the expense of managerial control.

Throughout the three industrial revolutions, successful businesses of one era rarely made the transition to the next. More often the old companies gradually (or rapidly) faded into irrelevance as new businesses built upon new organizational structures rose to the forefront.

The rise of empowered consumers demanding exactly what they want, when they want it, represents a paradigm shift on the same order of magnitude as McCraw's three revolutions of the past. According to Seth Godin, "just ten years after the birth of the Web, New Marketing [i.e. the pull economy] has so fundamentally changed the dynamics of production and growth that the rules of the third revolution are no longer dominant" (Godin, 44). The traditional model of centralized control cannot adapt fast enough to meet the unique demands of so many individual customers.

Revolutionary new organizational structures--indeed, entirely new conceptions of the firm--are demanded. What might these new structures look like? One inspiring example can be found in a revolutionary new structure developed at SEMCO, a Brazilian manufacturing and services firm headed by Ricardo Semler.

Semler asserts that traditional businesses are built on "formats that are basically legacies of military hierarchies." Even the language we employ--words like strategy, mission, and corporate battles--are borrowed from this military tradition. In Semler's view, these structures neglect or deny the power of human intuition and democratic participation.

"We all find democracy to be a fundamental issue in our lives," he says. "We will send our sons anywhere in the world to die for it. We will not participate in a society where we can't choose our own [leaders]...but, I've never seen a democratic workplace. So it's very important for our lives, except where we spend 60% of our time."

For the past 25 years, Semler and his firm have embarked on a bold experiment in self-organization that eliminates hierarchies, organization charts, job titles, required meetings, corporate headquarters and many other trappings of traditional corporations. Employees select their own leaders--not in a required voting system, but through open discussions at voluntary meetings. They also choose their bosses and set their own salaries. In effect, he says to his workers:

"Don't cross town and get out of bed to come [to our offices]. We don't want to know how many hours you work. Let's contract for something you can do, and you do it anytime you can, anyhow you can. But it is a free market system, and it's unforgiving in some respects. Every six months, you've got to latch on to somebody's payroll. Everybody in the business unit together will write down the names of the people they think they need, and if you're on that list for enough people you have a job."

In addition to its employees on payroll, SEMCO also has more than 1,400 people in its business units who do not work for the firm, including 19 who work for their direct competitor. By putting the creative forces of self-organization and natural selection to work within the company, the firm has unleashed productivity gains that would be the envy of any business.

The net result has been 27% annual growth for the past 25 years during a period in which Brazil went through various cycles of inflation and hyperinflation, economic boom and bust. Semler recently told an audience at MIT Sloan, "The military legacy and...the analytical approach to management in a pyramidal structure is finished. That is anachronistic and if it's going to take 10, 15, or 40 years to go away, it doesn't matter, but it will be during your lifetime."

Semler's most remarkable achievement is his willingness to abandon his need for control. By setting his people free to collaborate with whomever they feel is useful to their specific task, whether inside or outside the firm, he has tapped into a wealth of human intuition and creativity unavailable to traditional firms.

Although SEMCO's democratic workplace remains the exception, examples abound of companies that are experiencing explosive growth as a result of giving up control over their products and processes.

Take Threadless.com, an online retailer of t-shirts. In the traditional push model, a t-shirt company--even one operating online--would hire a talented artist to design great shirts and then spend extensively to generate demand for these products. Instead, Threadless has created a platform for aspiring designers to submit their designs, and put these to a vote by customers. If your design wins, you get paid $1,500 and your t-shirt is produced. The company has quadrupled sales every year since 2001, reaching more than $20 million in 2007 (Godin, 61). They did this by embracing customer control and building an organization that empowers them even further.

A more well-known example of giving up control comes from the Google search algorithm. In the early days of the web, the primary way to find content was through manually edited directories run by firms like Yahoo. Then two Stanford engineers realized that by downloading the entire web onto their servers, and then analyzing all the links between the various web sites, they could actually turn every webmaster into a voter in a popularity contest. If a website received a lot of links from other websites, Google considers it important and ranks it highly.

In fact, Google has taken user participation in its search algorithm at least one step further, by incorporating the behavior of searchers themselves into the results. For example, if a large enough proportion of searchers for a particular term choose the 2nd result instead of the 1st, Google readjusts its rankings to reflect user preferences.

Like traditional media companies, Google earns its revenues by delivering advertisements. However, Google is very different in that each advertisement is tailored to the precise search term a customer types into its engine. In a sense, customers are "pulling" advertisements relevant to their needs in a particular moment.

Just as interesting, Google has taken steps to embrace worker self-organization through its human resources policies. Every employee is permitted to spend 20% of their time on any project they want, even in a completely different field or, in some cases, outside the firm altogether. At the same time, the company has created powerful tools for workers to share ideas about new projects and get feedback from their peers. The ideas that get the most votes attract resources, at first in the form of people's voluntary 20% time. If a project shows significant potential, management may decide to formalize the project with greater financial and engineering resources.

The company's leadership openly acknowledges that they don't know what direction the firm is heading. Instead, they just give their people the tools to develop great products and then get out of the way.

As soon as you give up your need for managerial control, outsourcing work to your customers makes an incredible amount of economic sense. Indeed, many traditional businesses are employing their customers without even knowing it. Kevin Kelly, founder of Wired magazine, points out that every time you track a package on FedEx.com, you are actually doing work that used to be done by FedEx employees (Gibson, 256).

Meanwhile, Amazon's customers generate thousands of product reviews every single day, each of which enhances the shopping experience of other customers--people they don't even know. The result is increased customer loyalty and soaring profits. And they are doing it for free because Amazon empowered them do so.

These new organizational forms need not be constrained to for-profit enterprises. For example, the open source Linux and Apache operating systems now power the majority of web servers, the computers that send web pages to your browser every time you visit a web site. These programs were developed by ad hoc communities of software developers working for free because they found meaning in the work.
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Wikipedia has similarly created the world's largest encyclopedia on the backs of user contributions. By giving up editorial control, Jimmy Wales and his team harnessed the knowledge of millions of readers, who collectively know far more than any team of experts.

Kiva.org has raised millions for microfinance organizations by enabling donors in rich countries to provide micro-loans to entrepreneurs in the developing world. They did this without a marketing department, offices in the countries they serve, or direct contact with their donors. Rather, they let entrepreneurs tell their own stories, which are more authentic and inspiring than anything a corporate marketing department could put out.

In each of the preceding examples, we see a blurring of the lines between organizations and their customers, suppliers, and competitors. As these boundaries become less clear, a new conception of the firm is needed, one that can account for the dynamic, interconnected nature of the business world.

The militaristic perspective of the past must be replaced by the more accurate biological systems perspective. The biological systems framework not only creates a much more useful understanding of the corporation, it is also much more than mere analogy: Composed of human beings, businesses are biological systems in every sense.

As with any living system, companies are open systems that do more than simply take inputs from their environments and turn them into outputs. Much like biological organisms, as they process inputs and generate outputs, businesses are simultaneously creating their environments. In the natural world, it is meaningless to refer to competition between two organisms without taking into account the environment in which they exist. The winner will depend as much upon its inherited characteristics as upon the external factors provided by the environment. Those external factors, in turn, are co-created by all the various organisms within the network. What you have, then, is a competition between networks, rather than between organisms.

The significance of this analogy for the business world should not be overlooked. The future will be characterized by not competition between firms, in the traditional sense, but rather by competition between networks. Successful organizations will be those that can rapidly assemble team members and resources as project work demands. They will be flexible enough to quickly scale up to take advantage of opportunities or overcome challenges, and adaptable enough to scale down before cost pressure eliminates profitability.

As with successful genes in the natural world, successful business modules will be copied and spread widely, tested in new market environments and gradually adapted to local conditions. Unsuccessful modules will die out, though perhaps stored in somebody's mind (or computer database) for use in another situation at some future date.

In this biological model of the organization, there is no need to worry about whether a resource lies inside or outside the formal boundaries of your firm. What matters is whether they lie within your network where they can be brought together on short-notice when they are required.

Biological systems at all levels of complexity--from single-celled organisms to entire ecosystems--take on a life of their own with properties distinct from their constituent parts. These emergent properties arise as the result of the many local interactions of the system's components. In this light, corporate culture itself can be seen as an emergent property resulting from the countless interactions taking place between the members of an organization and its outside world.

While useful for developing a theoretical view of the firm, the biological systems view also generates actionable insights into creating high-performance cultures. To that effect, Robin Good and Ken Thompson have undertaken a systematic study of biological "teams" such as ant colonies and immune systems. These living systems manage to achieve incredible levels of coordination and productivity without advanced intelligence or centralized control. In the "Bioteaming Manifesto," they present a list of these characteristics, along with recommendations for how they can be applied to virtual networked business teams.

Most executives will acknowledge that technology often fails to provide promised productivity gains. Instead of the oft-heralded benefits of always-on connectivity, technology often becomes a time waster. Good and Thompson place blame a lack of norms, behaviors and beliefs properly adapted to the nature of virtual teams. They have therefore outlined twelve rules and seven beliefs that "bioteams"--biologically inspired virtual business teams--can adopt to achieve unheard of levels of coordination and productivity.

Unlike the rules of a traditional business environment, however, these cannot be driven from the top-down. Rather, they must emerge naturally from the bottom up collaboration of team members. Managers are no longer in control. Instead leaders--that means us!--will naturally emerge from within a team because of their ability to exert influence on team behaviors. We can do this in many ways, but the most likely candidate is, as always, leading by example.

Indeed, the first attribute itself is to "stop controlling." Good and Thompson argue that team members should communicate “situational information to team members who are trained to judge themselves what they should do in the best interests of the team.” No more command and control. Communicate what needs to be done and let them decide how.

The next attribute of high performance virtual teams is that all members take responsibility for identifying threats and opportunities. Team intelligence will be distributed, not driven from above. They argue that successful virtual teams must eliminate the "layers of permission" used by traditional teams to protect themselves from team member mistakes. "The only permission structures kept in place by a bioteam are those needed to protect the team against the potentially critical mistakes which would threaten the bioteam's own mission." In a virtual networked team, transparency and reputation are the basis for accountability.

Next the authors exhort us to "treat external partners as fully trusted team members." Partners should be chosen very carefully, but once admitted to a team, they should be granted full transparency and trust. Here they draw the analogy between the porous membrane of an organism, which accepts energy and useful inputs but keeps out poisonous toxins.

In a traditional team, the number of team members is decided in advance, and the group quickly scales up to achieve this optimal figure. Bioteams, on the other hand, acknowledge that they will never be able to calculate the optimal number in advance, and instead allow the growth of the team to rise or fall naturally as circumstances allow. The team should always be on the lookout for useful new members. Here the authors contend that successful teams must acknowledge their own lack of certainty, preferring to learn through "experimentation, mutation and team review" rather than through analysis.

While the lessons outlined above provide clear benefits to any virtual networked business team, Good and Thompson are also careful to acknowledge the key differences between human teams and other biological systems. Indeed, the differences themselves provide lessons that may be just as valuable in creating the dynamic business networks of the future.

The first difference is obvious to anybody who has compared ants and humans: We are much smarter than our six-legged counterparts. The important thing, according to Good and Thompson, is that "team members be able to self-select when to utilize personal 'intelligence' and critical thinking and when to rely on team intelligence before acting." While no team can achieve perfection in this area, trust built on experience working together, transparency, reputation and talent are key to achieving this level of self- and team-awareness.

The second critical difference is the subject of many religious tomes: between stimulus and response, humans are given free will. Because each team member can choose our response to a given set of circumstances, there is far more autonomy in the system, which may lead to less predictable results. Acknowledging that the actions that team members choose are the direct result of their beliefs, Good and Thompson identified the seven beliefs at the core of successful virtual cultures.

The beliefs shared by high performance virtual teams include clear and public accountability, trusted competency, give and take, total transparency, shared glory, meaningful mission value, and outcome optimism. Without these beliefs, virtual teams cannot succeed in mimicking high performance biological teams. However, with these beliefs in place, we can exceed the performance of even the best of today's human teams.

You needn't be a dot com superstar to take advantage of the attributes of biological teams to build a virtual networked business module. For example, in just four years, Wasauna.com has grown to be one of the leading suppliers of luxury bathroom fixtures--yes, toilets--in the U.S. In 2007 the firm sold more than $6 million of toilets, bathtubs, sinks and other 'old' economy products. They did this entirely through the Internet. Without showrooms or a strong dealership network, the firm is running circles around big name competitors like American Standard and Kohler.

How do they do it? Wasauna's management team has created a porous organizational membrane that can quickly assimilate team members with expertise the founders do not possess. They acknowledge their own core competency in web marketing and seek outside team members--whether employees, contractors or vendors--for everything else.

In addition to its ability to quickly assemble outside resources, Wasauna has taken advantage of nature's own form of generating creativity: the genetic algorithm. Before launching new products, traditional corporations appoint committees to size markets, analyze the competition, and build extensive cost-benefit analysis. Wasauna, on the other hand, relies on team member intuition and an acknowledgement that they will never really know what the market really wants until they try. So they roll-out competing products in parallel, as quickly and inexpensively as possible.

The result is a series of live controlled experiments that tighten the feedback loop with its market. As in natural selection, when a product is a hit, the company redoubles their efforts behind it. When a product is a dud, they learn from the lesson and move on--quickly.

In traditional corporations, on the other hand, analysis and optimization still rule. But while you can continue to optimize your products and processes, unless you are continually experimenting with radically new concepts, you are unlikely to make the shift to a paradigm-shifting new way of doing things. You may spend all your time climbing higher and higher, only to find you've reached the top of an ant hill, while Mount Everest looms on the horizon. Unless you step back, moving away from "optimization," you have no chance to find this new peak in the fitness landscape.

Successful business modules are those that constantly send scouts to feel out the landscape, testing new products, processes and ways of organization. While most experiments will fail, the success of one or two may give the company a chance to continue exploring.

The days of the military-inspired corporate pyramid are numbered. Markets are changing so fast that the commands coming down from the top start to bear little resemblance to the reality faced down below. The result is corporate dizziness. While many traditional corporations are taking advantage of the new forms of organization inspired by biological systems, far more will fail to make the shift. Extinction is a natural--indeed, necessary--part of evolution, so we should not lament their fall.

Instead, let this be a call-to-action for today's generation of entrepreneurs. The era of blundering corporate giants thriving on the production of average products for average consumers is rapidly coming to a close. To be sure, many good jobs will be lost in the process. But let historians find someone to blame for this. There is, in other words, no time for sympathy. Wel be too busy building new businesses, creating new jobs, and reinventing the very meaning of work.

Bibliography:

Beinhocker, Eric. The Origin of Wealth: The Radical Remaking of Economics and What it Means for Society. Harvard Business School Press, 2006.

Brafman, Ori and Rod Beckstrom. The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations. Portfolio Hardcover, 2006.

Capra, Fritoj. The Web of Life: A New Scientific Understanding of Living Systems. Anchor, 1997.

Carr, Nicolas. The Big Switch: Rewiring the World from Edison to Google. Norton, 2008.

Gibson, Rowan. Rethinking the Future: Business, Principles, Competition, Control & Complexity, Leadership, Markets and the World. Nicolas Brealey, 1997.

Godin, Seth. Meatball Sundae: Is Your Marketing Out of Sync?. Portfolio Hardcover, 2007.

Good, Robin and Ken Thompson. “The Bioteaming Manifesto” http://www.changethis.com/19.BioteamingManifesto, 2005.

McCraw, Thomas. Creating Modern Capitalism: How Entrepreneurs, Companies, and Countries Triumphed in Three Industrial Revolutions. Harvard, 1998.

Semler, Ricardo. “Leading by Omission.” Talk on December 11, 2005 at MIT Sloan School of Business. http://mitworld.mit.edu/video/308/

Semler, Ricardo. The Seven Day Weekend: Changing the Way Work Works. Portfolio Hardcover, 2004.

The Meaning of Life: Avoid Drudgery

2008-04-01T23:55:00.004+08:00

If a single version of the meaning of life were universally understood and accepted, everybody would spend all their time pursuing the same thing. That would be tremendously boring. So perhaps there is no fixed meaning for all people precisely for that reason--to avoid making the world so bland. Taken one step further, perhaps that is the meaning of life itself: to avoid boredom and make things as interesting as possible.

It's an oddly circular argument that won't stand up to much logical analysis, but food for thought nonetheless.

Lessons from the African Savannah, Revised

2008-03-31T01:55:00.004+08:00

Stefano Casertano at Thinking Bits has a hilarious piece about this old parable on the African Savannah.

"Every morning in Africa, a Gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a Lion wakes up. It knows it must outrun the Gazelle or it will starve to death. It doesn't matter whether you are a Lion or a Gazelle. When the sun comes up, you'd better be running."

"First of all," he says, "Lions hunt at night. Only untalented lions, unable to get anything at night, would stay up in the morning to try get something to eat. Then, mostly female lions hunt. So the claim is only valid for "untalented female lions", to avoid generalizations.

"Second, Gazelles seldom run. They only do that when they see a threat; it is rarely represented by a lion. Most of the times it is a van packed with tourists and screaming kids. Gazelles like to perform other activities when they wake up, than start running like crazy. If they do such things, park guards would think they have gone nuts and would shoot them down."

Read the complete post, its great...

While we're on the subject, here is the single greatest wildlife video every filmed. It takes a while to develop, so be sure and watch the full seven minutes. You will not be disappointed.

The Road to Entrepreneurship

2008-03-23T05:41:00.002+08:00

I just authored a post on the Columbia Business School blog about my plans for an entrepreneurial career. Columbia's new blog is an incredible platform for students and faculty at the school to share some of the amazing experiences we have everyday here in New York. From reports on guest visits by CEOs and entrepreneurs, to coverage of financial markets and and stories from student travel experiences, the blog is fast turning into one of the most engaging spaces on the net. No thanks to the fluff I manage to slip past the editors...

Update: Tiger Leaping Gorge Safe Afterall

2008-03-16T04:59:00.002+08:00

Thank you Phillipe, who notes that Tiger Leaping Gorge will not be dammed after all. Evidently the article I found (via Tiger Leaping Gorge's Wikipedia entry) is out-of-date.

Now I'm stuck, because this morning I decided that I was DEFINITELY going to the gorge during my China trip this summer. I'll probably still go, but now I can explore other options.