My Wonderwall ©

110%

2011-08-05T18:11:00.000-07:00

I know many people who make fun of the saying 'giving it 110%.' People laugh and say it is simply not possible to give something 110%.

I disagree.

We do it all the time. You get paid for a 40 hour work week but work 60. To me, that's giving it 150%. Let's say it takes 6 hours a week of exercise to have a healthy lifestyle. But if you're like me, you give it 2. That's giving it 33%.

If you want to get good at a hobby, maybe you need 8 hours a week and you only have 4 to devote. Well, my friend, you're doing a half-@$$ed job of it and you'll probably suck.

Relationships are quite the same way. To build a good friendship, you have to put in the time. Funnily, maintenance on a friendship decreases with the level of past investment... but that's for another blog post.

Ahem.

So let's also say you need 6 hours a week to maintain a healthy and fun relationship with your spouse but only give it 3. That's fine if you want a half-baked relationship and a divorce in half the time. Don't believe me? I can introduce you to a few people who had some rough experiences.

Now let the really fun math begin.

First, start by ranking a few aspects of your life in terms of importance to you. It may look something like this:

1) Solid relationship with spouse
2) Hanging out with friends
3) Learning to golf
4) Fulfillment at work
5) Feeling rested

Now let's think about a few ratios around your hypothetical day-to-day lifestyle:

Relationship with spouse: 6 hours/week for maintenance: 50%
Friendships: 1 hour/two weeks for maintenance: 100%
Your golf game: 3 hours each week to get good: 50%
Work: 40 hours each week to keep your job: 150%
Sleep: 8 hours each day to feel rested: 75%

Similar to your golf game, why would you expect your relationship with your spouse to be any better? Oh and that job, is that promotion really worth it? How does not getting enough sleep affect the rest of your day?

So the next time someone laughs at you for saying that you're giving it 110%, think about all the things you are not doing in order to give that extra 10, 20 or even 50%. After all, we only get 24 hours each day and 2 days for most weekends.

Then rethink your priorities.

The Tolerance of Failure

2011-03-18T11:16:00.001-07:00

On the tolerance of failure: No one likes to be measured, because everyone is afraid to come up short. If you tolerate failure, you encourage measured progress. Execution becomes a value.

Check Mate, You Lose.

2011-02-03T17:25:00.000-08:00

I know the rules.
I own the game.
I can't lose.

Check Mate.

Divergent Paths / New Ways

2011-01-16T06:53:00.000-08:00

Friends. They Change.

And we do, too.

Whether we like it or not

the people we once knew

may not be the same

in the subtle ways

we would wish

Yet we hold on

to memories and idle times

to smiles and warm company

For what becomes a life

but a string of what once was

and a song

sometimes sad, sometimes happy

that only you remember.

The Child who would be King

2011-01-15T11:26:00.000-08:00

Have you ever heard tell
of the child who would be king?

Have you ever had your heart
tipped at the end of some great spear?

Only to have it plunged
smashed 'gainst the shield?

For what care had the child
for the spear or heart or shield?

All that matters, of course,
is the want of a child king

and your permission - your yield.

Do you want a Bud Light?

2010-09-09T19:33:00.000-07:00

This was my grandpa's favorite line. And for several decades, he drank nought but Folger's coffee and Bud Light. And you couldn't visit him without sharing a drink with him, during which he would tell you the stories he was most proud to retell.

I recall sitting through many fairly disturbing meals of "kadon french fries and pork rinds" nodding my head and smiling as I worried about food poisoning. I guess I owe him for my cast iron stomach!

Oh, and don't forget there was always more Bud Light in the fridge.

Strongman

2010-09-09T19:17:00.000-07:00

Grandpa would always talk about when he was younger, he would never hit someone more than once in a fight.

You could tell even in his later years that grandpa must have been a fit young man. He would often recall the time when he was standing in line and a young man behind him put out a cigarette into his arm. (At which point grandpa would show us the scar). Grandpa would then relate how he then turned around slowly bringing his left arm slowly in front of the young man's eyes followed spritely by a right hook that had him flat on his back.

Grandpa recalled smugly that he then went into the store and that the young man was just getting to his feet when my grandfather left with his purchases.

When My Grandmother was Alive

2010-09-09T19:14:00.000-07:00

Grandpa didn't talk all that much. I remember going with them to the commissary. Grandpa would wait quietly in the car while grandma would go and buy groceries. We would then go to the cafeteria on base where I would order up the fried chicken and mashed potatoes. Every time.

Grandma would sit on her throne in the chair where she received all her visitors, cigarette in one hand and betel nut in the other. When family or friends would visit, grandpa would sit across quietly, sometimes talking about one of his repeated stories.

If grandpa repeated himself too often, I would share a funny wink with grandma sitting across the way. Then she would send me to Onedera or to fetch pupulu for her betel nut.

Tending the Garden

2010-09-09T19:11:00.001-07:00

I remember my grandpa's gardening. He would take this huge, 20-lb. rod and use it to pry out weeds from his lawn, which was always well kept. In later years, he would let the jungle around his house grow and call it his garden. Eventually, he couldn't garden nor fish anymore. He could talk about those days, though.

Fisherman

2010-09-09T19:05:00.000-07:00

I recall seeing my grandfather tending his talaya. He would sit for hours stitching and reworking. I would see him practice in the grass and I remember his many failed attempts at teaching me how to throw. I remember accompanying him to the beach a few times. He would always carry his own bucket. And he would try to show me how to watch for the shadows in the water, because that's how you know where the manahak was. To this day, I can point out small schools of fish from the seashore.

Most often, I would just remember my grandpa coming home with his catch held in the bucket or more recently in a small plastic container (usually a half-cut detergent bottle or Folgers coffee can). My grandmother would take the catch, clean it nicely and sometimes fry up some deliciousness or marinate it in vinegar with onions. Yum.

The old red volkswagon and later the pickup truck were always sandy.

A Carpenter - Hard Living -

2010-09-09T19:02:00.001-07:00

Grandpa would always talk about how he grew up a carpenter, learning the trade from his father. He remembered when he made his first bull cart. He would recall going hunting with nets for fanihi as a child with his older brother. He recalled growing up pretty poor and walking from Agana to Dededo with pails of water. He described a tough life growing up.

I still remember when he talked about his 5 cent steaks and how he was once told not to enter a bar because it was for blacks only. Times change.

After the War

2010-09-09T18:59:00.001-07:00

My grandfather would always recall how he was the first citizen in Guam to have a privately-owned vehicle. He would talk about how he joined "the postal" by which he meant the US postal service. For a time, the postal service not only paid him, but also paid to rent his vehicle from him. He also mentioned having a bus at some point and would recall with pride about how he used to have the island's first two-story house.

He built both his home and the home I lived in for a time in Dededo with my mom and brothers.

A Navy Man

2010-09-09T17:42:00.000-07:00

My grandfather was in the Navy twice. He was a damage controlman during his first tour. He would recall that his job was to be prepared to respond to emergencies. He would recall with pride that even if there was a high ranking officer on duty, as damage controlman, he would be in charge and the officer would have to listen to him. He would always say how he once took a test and out of 647 who took the test, he was number 1. He would always recall how he was invited into the administrator's office and told, "Pedro, if you want to be an officer tomorrow, you will be an officer." My grandfather would go on to say how he wanted to become an officer, but that my grandmother Fina wouldn't let him. He would recall how she "on account that she didn't want to live in the officer's quarters and associate with the officer's wives." He always spoke with some regret as he spoke of this, but of course, you could tell he lived a good life and was proud of what he had managed to do during his many long years.

During WWII, he was the chief steward serving the admiral. He wasn't in Pearl Harbor, he would say, because the admiral was far away at the time, and he was always with the admiral. He would laugh as he would recall his special privileges, being able to go ashore to visit his girlfriend when no one else was allowed because he could always claim he was getting supplies for the admiral. He would recall how the officer on the barge would think he was the admiral and salute and then curse when he realized it was only him!

Grandpa never really talked about combat except once mentioning that as troops advanced in one of the islands, they advanced to quickly and were bombed by their own ships. He also once off-hand mentioned having been at Guadal Canal. He never elaborated on these stories except to say that he once found a man's leg on the beach unattached to its owner.

He once mentioned that at the end of the war, there wasn't a whole lot of celebration. Too many people had lost friends in the war to celebrate.

Opportunity in Two Parts

2010-07-26T09:11:00.000-07:00

So life doesn't always give you exactly what you want. Maybe you find yourself getting your second choice of everything. This could just be the story for you.

One day, a chimp climbed down from his tree and found two sticks. He thought to himself, "Perfect. Now I can take these sticks and finally get at those ants tucked away in that tree over there."

Another chimp climbed down from his tree and found another two sticks. He thought to himself, "Perfect. Now I can take these sticks, throw them, and perhaps knock down those delicious fruits I could never reach before."

A third chimp climbed down from his tree and found a last set of sticks. He rubbed them together, a spark flew and landed in a pile of dry leaves. The whole forest was lit on fire.

Ok. So opportunity is kind of like the story of the chimps with two sticks. Each chimp encountered the same set of circumstances with dramatically different result. What was different in each situation, you might ask? After all, the chimps all encountered sticks in the forest.

So when in any situation, you should ask yourself which chimp you are. Are you the chimp that eats insects or fruit or the chimp that sets his whole world on fire?

You see, opportunity comes in two parts. You can always decide to be the part that is most important.

Fractured Markets ©

2010-06-26T17:53:00.000-07:00

Disparity. It is a well-known phenomenon of the modern capitalist system. As countries grow, the economic divide between the rich and the poor gets ever-wider.

And this is exactly the argument that a communist might make against the capitalist regime. The argument is derived from a commonly-held belief that capitalism functions at its best when competition delivers the optimal allocation of resources in an economy. Of course, to evaluate this statement, we first need to define the criteria by which we should evaluate capitalism.

I posit that the best way to measure the success of an economic system is to determine to what extent an individual is able to acquire that which will make that person happy. For simplicity, let us limit an individual's appetite to the world of goods and services.

If we define success in this way, then I posit that competition is only marginally relevant to how well capitalism functions to allow individuals to acquire that which will make them happy.

Let me explain.

In a previous post, I described the Indian economy, not as one economy, but as two separate and very distinct economies. The first, the unbranded economy, is characterized by hypercompetition between unbranded players, each individual limited in the scope of trade to those with whom personal relationships can be built. This is the economy of the hundreds of millions of poor living in India. This is the economy of the street-vendors and public vegetable markets.

This first economy is only marginally linked to the economy of the rich, where India's wealthy patronize branded shops and require branded service.

The greater the ability of individuals, firms or institutions to brand themselves and charge higher rents for their elements of production, the better off that second, branded economy becomes. The rich become richer.

What does this all mean?

It means that economic success is driven more by scarcity that drives up prices in a branded economy than by unbranded competition. The better individuals, firms or institutions are able to accrue higher rents for their services, the better off the economy becomes. Think of branding as a corollary to trust and a means of limiting unbranded competition through differentiation.

What the unbranded masses need is exactly the opposite of increased competition. They need to start specializing, limiting competition and branding themselves - creating real or psychological scarcity. This will allow individuals, firms or institutons to accrue higher rents. In India, this is similar to the street vendor advertising the use of bottled water instead of questionable tap water in its meal preparation.

How does an economy help individuals get what will make them happy?

The Chinese have it right. Limit the number of children individuals have in a country where labor is cheap. The subsequent "relative" labor scarcity will encourage specialization, individual branding and the greater accrual of rents to individuals within the system.

This is not to say that every country should try to limit procreation in this way. However, the extent to which a nation can encourage specialization and individual branding through education, for example, the better off that nation will be.

The radical in me suggests the Chinese approach, however, in cases like India where there is a radical oversupply of labor that limits individual branding power.

So why is disparity NOT in and of itself a bad thing?

It is simple: The unbranded masses trade with each other. They can purchase goods in the unbranded market. To the extent that brands, specialization and pricing power emerge - effects of exclusion/scarcity and NOT unbranded competition, the greater rents they can accrue.

Disparity does NOT mean that poor people cannot access the goods and services that will make them happy. Disparity just means that the rich can access better goods and services than the poor.

So what lessons can we draw?

Competition in an unbranded market damages an economy by lowering prices and making it harder for individuals to accrue the rents they need to purchase the goods and services that will make them happy.

Specialization, scarcity and exclusion drive prices up and accrue rents to branded individuals, firms and institutions in an economy. This is the key to economic expansion in a capitalist system and is MORE important than unbranded competition as per the commonly-held belief.

If the US or any other economy can master these ideas and principles, then they hold the keys to the true power of the market to determine prices and economic success (read individual access to the goods and services that will make them happy).

Disparity (read exclusion) thus becomes a natural byproduct of the successful economic regime, and should not be maligned by the enemies of the free market. After all, unbranded competition hurts everyone and the poorest most of all. Specialization and scarcity, however, will set you free to charge what you will and accrue the rents you need to acquire that which will make you happy.

And what is the personal take-away?

Take care of your individual brand. The more branded you are, the greater rents you will accrue and greater economic success you will have. It's a simple statement, but powerful. It means that you should get a branded education and experience when and where you can.

Tips on Europe to a Friend in Austria for a Few Months

2010-06-16T07:02:00.000-07:00

Austria:

• Salzkammergut (weekend getaway) – Click here for pictures

• Melk Abbey (hit on way to Vienna) -
Click here for pictures

• Vienna (1 – 2 days)– pretty much anywhere in this town is great / take in an opera or symphony / definitely visit Schloss Schonbrunn – take in some art (don’t forget to try a Käsekrainer – cheese-filled sausage from a street vendor).

• Salzburg – 1 – 2 days – highlights: Mirabell Gardens / Castle; Must eat Bosna (anywhere) and Doner Kebab from the train station if you like spicy or from Vogelwiederstrasse; If you are fans of The Sound of Music, there’s a kitchy tour that is actually worth it if you get a good guide (Mitch is amazing if you can get him). MUST: Find the Augustiner and eat some of the ribs with a few liters of beer

Germany:

• Munich: Beer; great museums; try the rotisserie chicken at the Munich train station (go with the Schoenes Wochenende ticket – really cheap weekend ticket from Salzburg); visit Dachau concentration camp on an extended visit (if you go, I can get you in touch with a friend)

• Nuernberg: Go for the Christmas market (I have friends here)

• Cologne: Longer trip, better overnight

• Berlin: Longer grip, better overnight – do not go in Winter (very cold)

Italy: (all longer trips – overnight trains – better with long weekends)

• Florence

• Cinque Terra (a-mazing – be prepared to hike between the 5 villages): – Click here for pictures

• Sienna: – Click here for pictures

• Venice: overrated, but your girlfriend might like it

• Milan (I’ve never been here, but I have friends here)

Czech Republic (if you go, I have friends in town)

• Czesky Krumlov

• Prague

Hungary

• Budapest: – Click here for pictures

Slovenia

• Ljubljana: – Click here for pictures

Switzerland

• Zurich

• Interlaken (longer trip, better with overnight train)

MUCH LONGER TRIPS, BUT WORTH IT IF YOU GET A LOT OF TIME OFF – recommend you need a four-day weekend at least:

• Krakow, Poland (good to see Auschwitz; great student life)

• France: Paris (overrated), Versailles (exceeds expectations)

• AMSTERDAM: try the pancake factory near the Anne Frank museum – Click here for a review

• Barcelona, Granada Spain

• Meteora and some of the islands in Greece: – Click here for pictures

• London/Edinburgh in the UK; Dublin, Ireland

The Unconscious Politics of Exclusion

2010-06-01T20:45:00.000-07:00

We've all been there. There they are. It's a circle of people we don't really know, except for that one good friend. We'll call him Jim. We think to ourselves, "Gee, I think I'll just go over and join the group. After all, my good friend Jim is there."

So you walk over. The circle doesn't widen and you squeeze yourself in, but barely. You say hello, but the conversation doesn't ebb and no one turns to acknowledge your arrival. You start to enter the conversation, but for whatever reason, everyone leaves.

There is an unspoken law of exclusion at play in almost every group setting. Let me explain.

Individual members of a club derive benefit from exclusivity. The more members there might be, the more dissolved the benefit and the weaker each member becomes.

Those with power often wield it unconsciously. And it is often not with whom group members connect, but who they decide to exclude from a network that gives members individual strength.

There are many who subconsciously practice the rule of exclusivity. These are the individuals who, talking within a circle, will not acknowledge your presence and move on rather than risk forming yet one more connection in their exclusive circle. They do not know that their actions are born of a subconscious understanding that exclusion is the key to power in social circles.

Then there are the people I would just call 'the Includers.' For whatever reason, these are the people who haven't discovered the power wielded by the in-players, and instead seek to include others in their networks whenever possible.

This, of course, diminishes club exclusivity and incentives for members to join. The includers, end up being the most powerless and least cool.

And most interestingly, popularity becomes a product of exclusion.

The Marginal Cost of a Step in the Wrong Direction

2010-05-27T02:24:00.001-07:00

I've said in previous posts that small decisions matter. More recently, I've argued that we often ignore the opportunity cost of not changing the fixed investments in our lives.

And here's the big insight:

The marginal cost of a step in the wrong direction is never as great as the sustained effort it would take to change course and take a wholly unknown and unknowable path.

For those of you familiar with Harvard Professor Clay Christensen's work on disruptive innovation, he argues that rent-seeking firms tend to focus on higher margin products, leaving room for disruptive innovators to gain traction and eventually overtake market leaders.

This is only part of the story. Or it is only part of the story that he explains.

Again, the marginal cost of a step in the wrong direction is never as great as the sustained effort it would take to change course and take a wholly unknown and unknowable path.

So when a firm focused inward on keeping along its own path of innovation, where the marginal cost of the status quo is close to zero, it is often difficult for it to get over the organizational inertia of marginal versus disruptive innovation.

A similar concept can be applied to our society. How challenging is it for society to accept change, especially if today's costs outweigh today's benefit? After all, the marginal cost of the status quo is always near zero and the cost of change is always greater than our costs in simply staying the course.

Now apply the concept to our own lives. If a marginal decision to eat that next cupcake or sit in the same routine or take a job very similar to our last is the easiest to make (and society reinforces how easy this is to make), then why would we ever seek out change? Why is it often so difficult to be a disruptively innovative force in our own lives?

Again, the marginal cost of a step in the wrong direction is never as great as the sustained effort it would take to change course and take a wholly unknown and unknowable path.

And as Clay Christensen so aptly put it in his visit from the Harvard Business School to MIT Sloan, "I've always found it easier to stick to my principles 100% of the time than 99% or 98%."

One of the wisest people I've ever heard speak, Clay is simply articulating his recognition of the power of marginal decisions to add up to a lifetime of steps in the wrong direction.

Here's to fighting inertia in our lives and innovating beyond what we were yesterday.

<< An Addendum: In his essay, "Why I belong, why I believe," Clay Christensen writes: I still remember his key point: “We often view repentance as a slow process. It isn’t. Change is instantaneous. It is not changing that takes so much time.” >>

Picture from Clay Christensen's work on disruptive innovation. Read his book, Innovator's Dilemma, for more information.

Satis-fiction

2010-05-22T06:23:00.000-07:00

Satisficing. It's not a term I came up with, but it resonates. Wiki defines the term as "a portmanteau of satisfy and suffice; a decision-making strategy that attempts to meet criteria for adequacy, rather than to identify an optimal solution. A 'satisficing' strategy may often be (near) optimal if the costs of the decision-making process itself, such as the cost of obtaining complete information, are considered in the outcome calculus."

To my mind, the concept is a double-edged sword. On the one hand, it allows for a solution to be achieved to allow a broader process to take a step forward. It may not be the optimal step forward, but sometimes small incremental advancements are necessary. On the other hand, 'satisficing' could lead to situations in which a suboptimal solution is held for far beyond an ideal length of time.

As a follow-up to my career post on Wednesday, 'satisficing' could be seen to play an important role in the career decision-making process. Especially in a fragile economy, individuals may be hesitant to take on the inherent risks of unemployment and accept job opportunities that are satisfactory but not optimal.

In the calculus of a career choice in today's economy, many overqualified individuals could be in the market for sub-optimal roles. The danger, of course, is that upon economic recovery (should we be so optimistic), we might see these individuals trade up to jobs more reflective of their respective skills or experience. The net benefit in this situation, of course, is that start-ups may have an easier time attracting talent as relative risks are reset in the minds of job-seekers.

The 'law of satisficing' also applies to individuals with stable employment who might overestimate the challenges of the current economy and choose not to try to advance their position. This is another case in which the sword cuts the wrong way.

In my specific case, I turned down a job offer recently. I'll let you know in a few months whether I made the right decision (i.e., if the risk I took on was worth the security I gave up). Wish me luck.

The Smartest Person I met in India

2010-05-21T04:46:00.000-07:00

...didn't even graduate from high school. He was a teenage high school drop-out from the Dharavi slum, Asia's largest. He eschewed the term 'slumdog.' Defiantly, he admonished his tour group, 'As you'll see, we are NOT animals. You can understand how we might be offended by the term.'

In any case, the kid's sharp wit and the way he carried a mantle of what must have been an unforgiving childhood made me think that I could learn from this kid, even if he happened to be 12 years younger than me.

I don't remember his name, but I use his image to remind me that there are choices I have never had to make and capability in everyone that I should never fail to recognize.

The smartest person I met in India didn't even graduate from high school. Who is the smartest person you have ever met?

A picture of the Dharavi slum in Mumbai, India.

Career Advice from Mirrors and Prisms

2010-05-19T10:51:00.002-07:00

You know, I haven't really read a ton of books about career strategy or how best to get ahead in the workplace. Recently entering the job market again, however, I have spent a little bit of time thinking about what does and does not make for a good career move.

And as a good former consultant, I started to think of a set of simple rules and frameworks to help organize my thoughts and came across a couple of analogies and a few dimensions to think about.

1) Career accelerators exist: branded companies, fast-growing companies, encouraging mentors, high profile roles, large accomplishments, managing people/teams/projects, involvement in strategic decision-making, P&L, sales or business development experience, promotions in title and scope of responsibility

2) Career decelerators exist: unbranded companies, stagnated bosses, dead-end roles, limited accomplishments, narrowly-defined responsibilities, focus on analytics as opposed to relationships

3) Some career moves may or may not add value: only switch companies if you lose momentum, for example. Similarly, turnaround situations are only value-add if you do, in fact, help to turn a situation around. Salary increases, unfortunately, do not necessarily add to career momentum.

You can also think of roles that fall into two broad buckets:

1) Mirrors: A type of role that focuses you in on a narrow area of responsibility which might allow you to move quickly towards managing others and promotions, but in a narrow field. This type of role may not lend itself to career advancement beyond a director or VP level. Think accounting.

2) Prisms: A type of role that will diversify your skill set, move you more slowly towards management responsibility, but allow you to advance outside of a narrowly-defined role and ultimately lead you to broader management responsibility and may lend itself more readily to advancement to a CEO position. Think management consulting.

As you think of the dimensions and frameworks when evaluating your next career move, please feel free to share your ideas with the rest of us.

Of Formative Times and Blind Spots

2010-05-19T01:40:00.000-07:00

For better or for worse, we are a product of our experiences.

And there are periods of intense learning that often dictate how we interact with the world far beyond what we would otherwise expect.

Think about your first professional job. What habits did you form from learning from your first real manager? If you have ever switched into a completely new job, perhaps you picked up a new set of skills and added to your world view of what is important and how to operate within a workplace. Regardless of how many jobs you have had, I would wager that you have probably never quite let go of many of the habits you picked up from your first job.

Similarly, your early life helps to define your world view, from your upbringing in a particular socioeconomic or cultural milieu to your choice of friends within the context of school or neighborhood play. For example, what norms around reciprocity, masculinity, playfulness or competitive drive do you derive from early conditioning from your parents and your friends?

Given that we are often unaware of habits forming as they become part of our modus operandi, it is critical that we recognize key points of inflection, or so-called formative times, as they occur. After all, our success in navigating life beyond our formative experiences may ultimately depend upon the extent to which we can avoid forming bad habits, however defined.

More difficult still is, of course, recognizing our own blind spots. Being a product of our experience, it is almost impossible to take or even appreciate a perspective that doesn't conform to our own expectations.

We even go so far as to judge the relative merits of others and their actions by how closely their approach to life conforms to our own expectations, regardless of how irrational expectations limited by our experience might be.

Ultimately, it is the rarest of individuals who, knowing that they know not, can let go of their own biases to value and adopt a view that goes against their own experience of the world. These, my friends, are the lovers of truth.

Rarer still are the individuals who, knowing that they know not, thirst to uncover truth about the world with a mind open to all possibility and a ruthless discipline to extract it. These, my friends, are the world's true visionaries and humanity's heirs-apparent to Eden's tree.

US Taxes by Industry in 2007

2010-05-14T09:51:00.000-07:00

Do you find this surprising?

Of Branding, Mini-Markets and Economic Evolution

2010-05-13T11:33:00.000-07:00

In India, I was smacked in the face by two worlds.

On the one hand, there are millions of people living and working on the streets of India, plying trades that are limited by the sheer press of immense competition. One barber is the same as countless others, and branding and pricing power is built solely on the number of one-on-one interactions an individual can make. That is, the market is almost completely unbranded, and as such, individuals trade with each other at a very low level, accruing abysmal rents as they trade with one another. The poor participate in what I call the economy of the unbranded masses, where classical forces of supply and demand dictate the livelihood of millions of the nation's poor.

On the other hand, there are individuals within India who are ridiculously wealthy. As a tourist, I ate more $50+ meals in two weeks than I ever would as a diner in the US. In India, wealthy individuals patronize branded restaurants (which make up only 2% of all eating establishments), high end stores and generally trade amongst each other creating a second market within India. This second market is characterized by both the real and artificial scarcity of labor supply and quality goods. Individuals within this economy trade amongst one another at a much higher level than the unbranded masses. They are allowed to specialize, through means both real and artificial, to trade at branded prices.

So the startling conclusion is not that there are rich and poor in India, but that both the economies of the rich and economies of the poor, aside from small cross-linkages, are actually two very distinct economies. Real/artificial scarcity in terms of trustworthy products of reputation, highly educated labor or skilled services form the basis for branded pricing among the wealthy.

That is, I would argue that wealth creation is much more about exclusivity, specialization and branding (trust) than it is about competition in the sense of a classical understanding of the capitalist system.

Think about China's one child policy. It can be construed to be a method for containing the country's population to preserve resources. I disagree. Think about the amount of human capital per person across generations invested in each subsequent generation. Two parents have one child. That child has a much, much higher likelihood of achieving beyond the success of his or her parents because of the simple fact that the efforts of two individuals are invested in the potential of one. In essence, 1 + 1 could equal 2.5 in terms of the human capital generated through increased opportunity to specialize and differentiate granted an only-child.

Elevate China's one-child policy to the level of the nation, and what do you get? You get a limiting of labor supply, an encouragement of specialization, and through that, you get an increase in the individual's ability to become a branded product without having to compete (as much) with the unbranded masses. You also get disparity on a grand scale, but as a natural byproduct of mechanisms fundamental to capitalism: exclusivity, specialization and pricing power.

It has been shown that developed societies tend to have fewer children. Could it not also be the case that a society starting with an oversupply of labor is actually encouraging economic growth simply by limiting the size of families and reaffirming a commitment to differential access to resources on a per capita basis? 1 + 1 does equal 2.5 in some ways, after all.

That is, the more specialized and differentiated actors within an economy can become, the more each actor can accrue higher rents through branding and the more valuable in turn a society's product becomes to external economies...

Whew... that was a lot to include in this particular posts. As always, thoughts are welcome - feel free to add, detract or criticize as you see fit.

Shift. Paradigm.

2010-04-28T07:17:00.001-07:00

Or why what you can measure probably doesn't matter.

Do you all remember the scene in the movie Big with Tom Hanks? Do you remember how Hanks' child-like ability to play in a toy store made him the absolute perfect person to test toys?

How many of you have ever met a guy who knew so much about cars it was scary, but worked in an office mail room... Have you met the guy who could tell you who the top 5 baseball hitters were in 1987, but worked as a mechanic or construction worker? Have you met someone who had a heart of gold and would have made a brilliant doctor but never got the chance to go to medical school?

No amount of academic training nor level of work experience nor pedigree can replace a passion or inherent aptitude for what you do. Yet we have replaced the intangible, immeasurable for the tangible yet incorrect measures of what should dictate what people do in life. Passion has no place in a world where the prestige of a college institution or place of employment overshadows the passion that should be a far greater predictor of success. And we all, as a society, pay for suboptimal performance as we make the unconscious trade-offs based on perverse, often incorrect measures of fit to roles.

And as you think again about the movie Big, think about the person you are on the inside. Don't forget to let that person out to play once in a while. Both you, and society, will be better off.

Because if there's one thing I've learned in business school, it's that it is not neccessary for you to lose in order for me and everyone else to win.