Book Review: Great by Choice – by Jim Collins and Morton T. Hansen

Another hit by Jim Collins and team.

I read Good to Great some years ago and then made it required reading for all team members in our company. The vocabulary we gained, the concepts we learned, are still permeating the organization today. Everyone knows what it means to turn the flywheel.

In Great by Choice, Collins again analyzes a set of companies and illustrates his point with examples taken from areas of life very removed from business. Among others, he tells stories about Roald Amundson’s expedition to the South Pole and contrasting and comparing it to business practices of companies today.

Collins’ academic style, his meticulously researched findings, and his colloquial way of wrapping his conclusions into stories makes for very easy reading. I learned a lot, and I found myself motivated to excel in business.

Rating: ** 1/2

Book Review: Tape Sucks – by Frank Slootman

I met the author of this book, Frank Slootman, at a CEO roundtable meeting perhaps a year ago or so. These meetings are quite effective, since there are only some 15 to 25 participants present, along with a moderator and a guest. Frank sat right across from me at the table, and I was thoroughly impressed with his no-nonsense approach to business and his candid, quick wit.

The told the group that he had written a “small book” about his experience at Data Domain, the backup company that got its name by the slogan “Tape Sucks” in the mid 2000s. He took over as CEO in 2003, and the company was doing over $1 billion in business a year when it was sold to EMC, their arch competitor, in 2009.

Obviously, Data Domain is a great technology success story, and his book, Tape Sucks, tells the story, from beginning to end. He writes like he speaks, minus the Dutch accent. The book is a quick read and full of nuggets of wisdom from a guy who has been there.

The audience for the book are:

  • Current CEOs of startups
  • CEOs of companies that want to grow from 20 people to 1000
  • Entrepreneurs that want to start a technology company of any type

I enjoyed this book thoroughly and I found myself nodding all the way through.

Now, if I only remember all the tips as I go through my workdays.

Rating: ***

Was Bill Gates Lucky?

There are many people who write (and post comments) about how lucky Bill Gates was, being born at the right time, living in the right place, and having priviledged parents. All luck, right?

In his book, Great by Choice, Jim Collins has a good section on this topic:

Why did Bill Gates become a 10Xer, building a truly great software company in the personal computer revolution? Through one lens, you might see Bill Gates as incredibly lucky. He just happened to have been born into an upper-middle-class American family that had the resources to send him to a private school. His family enrolled him at Lakeside School in Seattle, which had obtained a teletype connection to a computer upon which he could learn to program, something unusual for schools in the late 1960s and early 1970s. He just happened to have been born at the right time, coming of age just as the advancement of microelectronics made the personal computer inevitable; born 10 years later, or even 5 years later, he would have missed the moment. His friend Paul Allen just happened to see a cover story in the January 1975 issue of Popular Electronics titled “World’s First Microcomputer Kit to Rival Commercial Models.” It was about the Altair, designed by a small company in Albuquerque. Gates and Allen had the idea to convert the programming language BASIC into a product that could be used on the Altair, which would put them in position to be the first to sell such a product for a personal computer. Gates went to college at Harvard, which just happened to have a PDP-10 computer upon which he could develop and test his ideas. Wow, Gates was really lucky, right?

Yes, Gates was lucky, but luck is not why Gates became a 10Xer. Consider the following questions:

  • Was Gates the only person of his era who grew up in an upper-middle-class American family?
  • Was Gates the only person born in the mid-1950s who attended a secondary school with access to computing?
  • Was Gates the only person who went to a college with computer resources in the mid-1970s? Was Gates the only person who read the Popular Electronics article?
  • Was Gates the only person who knew how to program in BASIC?

No, no, no, no, and no.

Lakeside might have been one of the first schools to have a computer that students could access during those years, but it wasn’t the only such school. Gates might’ve been a math and computer whiz kid at a top college that had computers in 1975, but he wasn’t the only math and computer whiz kid at Harvard, Stanford, Princeton, Yale, MIT, Caltech, Carnegie Mellon, Berkeley, UCLA, Chicago, Georgia Tech, Cornell, Dartmouth, USC, Columbia, Northwestern, Penn, Michigan, or any number of other top colleges with comparable or even better computer resources. Gates wasn’t the only person who knew how to program in BASIC; the language had been developed by professors at Dartmouth a decade earlier, and it was widely known by 1975, used in academics and industry. And what about all the master’s and PhD students in electrical engineering and computer science who had even more computer expertise than Gates on the day the Popular Electronics article appeared? Any of them could have decided to abandon their studies and launch a personal computer–software company, as could have computer experts already working in industry and academia.

But how many of them disrupted their life plans (and cut their sleep to near-zero, inhaling food as fast as possible so as not to let eating interfere with work) to throw themselves into writing BASIC for the Altair? How many of them defied their parents, dropped out of college, and moved to Albuquerque—Albuquerque! New Mexico!—to work with the Altair? How many of them got BASIC for the Altair written, debugged, and ready to ship before anyone else? Thousands of people could have done the exact same thing as Gates, at the exact same time, but they didn’t.

The difference between Bill Gates and similarly advantaged people is not luck. Yes, Gates was lucky to be born at the right time, but many others had this luck. And yes, Gates was lucky to have the chance to learn programming by 1975, but many others had this same luck. Gates did more with his luck, taking a confluence of lucky circumstances and creating a huge return on his luck. And this is the important difference.

 

Poker and Facebook

There is a famous saying related to poker playing:

“If, after the first twenty minutes, you don’t know who the sucker at the table is, it’s you.”

Same thing with Facebook. Facebook is a website, now rumored to be worth $100 billion. There is no product you can buy on Facebook. When there is no product to be found on a website, beware, because…

…you are the product.

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Tribute to Earl Nightingale

I recently bought the Nightingale-Conant program The Essence of Success, a collection of 20 CDs of Earl Nightingale recordings, dating back to the 1950s. In the mid to late 1980s I listened to Earl’s programs on tapes. I subscribed to his program Insight, a monthly magazine on tapes. The first half of the cassette had an introductory section of a Nightingale-Conant author, introduced by Earl, and the back contained vignettes of wisdom and inspiration recorded by Earl. I loved Insight, and I was always excited when I received the new issue.

Often I listened to the Insight tapes while walking at night. When my daughter was an infant, I’d put her in the snugli strapped to my chest, put on headphones and listened to Insight, while we’d take long walks. When I’d re-listen to some of those tapes in later years, I would sometimes remember the exact place where I was walking when I first heard a given passage.

Earl Nightingale died in March 1989. I still remember the day I found out. I was sad and I missed him, and Insight was never quite the same after that. I let my subscription lapse, and a few years later they stopped the program.

Earl would be talking about creativity in business, and how we could not think of anything new to invent. Computers, fax machines, telephones, television, all had been invented. What more could there be. He always had a vision of creative people coming up with things we hadn’t even thought about.

Earl died before email, before the Internet, before cellphones, before Yahoo!, before Google, before Facebook. Yet he always preached that things would come from our own ingenuity that would transform our world. The principles he applied back then are still true and effective today, and I am amazed that I still find wisdom and enormous amounts of motivation from recordings of a speaker that passed away over 23 years ago.

Reading up on Earl Nightingale on Wikipedia I just learned that when he was seventeen he joined the United States Marines. He was on the USS Arizona during the attack on Pearl Harbor and was one of twelve surviving Marines on board that day.

One of my true heroes.

Light Bulbs at The Home Depot

Arthur and Bernie are the founders of The Home Depot. In the book  World Changers, they talk about Jack Welch and General Electric, their supplier for lightbulbs:

Arthur: One guy who never learned was Jack Welch [of General Electric].

Bernie: He never did. In fact, we threw his light bulbs out of the store for that reason. I had a place in Florida and when you went down there in October and November, you sell a lot of bulbs due to the switch to daylight savings time. And GE was making our bulbs then. I went into the stores in Florida and found out we didn’t have a single sixty-watt bulb in stock. I remember calling Jack up and saying, “Jack, this is insanity. We don’t have bulbs.” “We’ll have to check into it,” he said.

It was total bullshit. He sent the head of GE lighting down to see us and he said, “There won’t be a problem next year. We’ll definitely take care of you. You just have to give us the orders ahead of time.”

We did that and when October and November came it was the same goddamn thing. There were no bulbs in the stores.

And I found out the reason for it is because their year-end bonus was based on how much inventory they had at the end of the year. The following year, I flew to the Netherlands, met with the Philips people, and I came back and told Jack, “No more problems. We’re throwing you out.”

And we threw GE out. Philips built factories to supply us with bulbs in the United States.

Steve Forbes on Global Warming

Steve Forbes, the editor-in-chief of Forbes and former presidential candidate has a loud voice and a large pulpit to speak from: the magazine that bears the names of his ancestors. In his lead column, Fact & Comment, he routinely touts the benefits of market economies, conservative policies, and the capitalist system. With his access to world-class economists and scholars on the subject, I am no match myself to argue with him on the details of economic policy. I simply do not have the training or detailed background to evaluate his arguments. Most of the time they sound convincing.

However, in the May 7, 2012 issue of Forbes, on page 12 of Fact & Comment, in the section Bearable Truths, he speaks with the same authority and confidence and makes an implied argument that global warming is not man-made or man-influenced. This topic, however, is not economics, and just reading it with a mildly critical eye exposes severe logical fallacies and clearly shows that Steve Forbes does not respect us enough to appreciate that we can think on our own.  By doing this he puts himself on the same level as all the loud knuckleheads that are trying to put “creation science” into our public school classrooms and want to impede scientific progress in our country by forcing their medieval religious value systems on the rest of us.

This single article of Forbes has me now doubting his authority and intellectual capacity on every other subject he has written about so eloquently. Does Forbes know what he is doing, or is he just feeding sound bites to his ideological followers and hoping they are dumb enough to lap them up?

Here is Forbes’ column, Bearable Truths:

A couple of new studies have blown yet another hole in the notion of man-made global warming. Remember those stories a few years ago about how global warming was melting the ice caps, thereby putting polar bears on the road to extinction? Well, a new survey from the government of Nunavut, a Canadian territory, has found that the number of polar bears in northern Canada is flourishing and may be the highest it’s ever been.  That census confirms other findings that polar bears are thriving.

Another inconvenient study, from a group of Syracuse University scientists, has come out showing that during medieval times other parts of the Earth – not just Europe – heated up and then cooled down naturally for what turned out to be a mini ice age (1350 – 1800). Obviously, the world of 1,000 years ago didn’t have SUVs and coal-fired power plants to account for the warm weather.

So what is wrong with this?

Environmentalists are obviously contributing to the global warming debate by exposing the plight of flora and fauna resulting from global warming. Polar bears may or may not be immediately challenged by global warming. There are many studies that the melting of the northern polar caps would wipe out the habitat of the polar bears. This new “survey” by Nunavut shows that polar bears are flourishing in Nunavut now. That does not mean that the disappearance of the northern ice caps one, two or three decades from now would not still extinct the polar bears.

Polar bears thriving or not, polar bears being threatened or not, studies showing polar bears flourishing or not, none of it has anything at all to do with the notion that global warming right now is man-made. The two issues are unconnected and connecting them to make this argument is intellectually insulting.

The entire controversy of global warming, man-made or not, has  deep implications on our society, and making it sound like it’s about the survival of polar bears as a species is patronizing.

Scientists at Syracuse University showed that in medieval times other parts of the Earth heated up. What’s this “not just Europe” about? Did somebody argue just Europe heated up?

Just because the world cooled down from 1350 to 1800, and there was a mini ice age during those centuries, does not have anything to do with whether the current global warming trend is man-made. There were obviously external factors that caused the world to warm up before 1350, and then cool down again. The Earth has warmed up massively and cooled down massively over the eons and that will not stop. Eventually, global warming of the non-man-made kind will evaporate all the oceans, kill all life and burn the Earth to a cinder ball. There are natural cycles of warm and cold. Forbes’ implied argument that just because Syracuse University scientists have studied medieval temperatures and showing a global warming without the benefit of SUVs and coal-burning does not prove or even indicate anything about the origin of today’s global warming. The two facts are unrelated and this argument is intellectually insulting.

Forbes says nothing about the number of studies showing evidence of the current global warming trends being man-made, versus the number of studies showing the opposite.

Forbes references “scientists” and “government surveys” in Nunavut, but he does not provide any sources that would enable us to actually check his facts further.

These new studies have not blown a hole in the notion of man-made global warming. They have not even made a pinprick. These studies say not a word about whether global warming is man-made.

 

Book Review: World Changers – by John A. Byrne

25 Entrepreneurs Who Changed Business as We Knew It

Reading World Changers was like having 25 long lunch meetings, and getting a chance, one on one, to talk to some of the greatest entrepreneurs of our time, the likes of Bill Gates, Mark Zuckerberg, Steve Jobs, Howard Schultz and many more.

Here is the table of contents:

  • Whole Foods Market – John Mackey
  • The Home Depot – Arthur Blank and Bernie Marcus
  • Netflix – Reed Hastings
  • Starbucks – Howard Schultz
  • Amazon – Jeff Bezos
  • Southwest Airlines – Herb Kelleher
  • Apple – Steve Jobs
  • Kohler Co. – Herb Kohler
  • Donaldson, Lufkin & Jenrette – Dan Lufkin
  • Dell, Inc. – Michael Dell
  • LinkedIn – Reid Hoffman
  • Microsoft – Bill Gates
  • Virgin Group – Richard Branson
  • Harpo, Inc. – Oprah Winfrey
  • Turner Broadcasting – Ted Turner
  • FedEx – Fred Smith
  • Infosys – Narayana Murthy
  • Google – Larry Page and Sergey Brin
  • Charles Schwab – Charles Schwab
  • Grameen Bank – Muhammad Yunus
  • Tata Group – Ratan Tata
  • Nike – Phil Knight
  • Organizing Committee for Rio de Janeiro Olympics – Carlos Nuzman
  • Facebook – Mark Zuckerberg
  • EBX Group – Eike Batista

The lessons were valuable. I read usually just one chapter at a time, over lunch, before going to sleep, waiting somewhere. It’s impossible to read a book like this in a sitting.  It’s like visiting the Metropolitan Museum of Art, which causes complete sensory overload for an artist. Anybody even remotely thinking about starting a company, or already running a company, cannot afford to skip this book. Every line is valuable, inspiring and motivating.

I should read this once a year.

Rating:  ****

Overnight Success: WD-40

The ubiquitous WD-40 lubricant is a product invented right here in San Diego. It got its name because the first 39 experiments failed. WD-40 literally stands for “Water Displacement–40th Attempt.”

I have written about WD-40 before here in this blog.

If they gave up early on like most of us do, we would have a lot more squeaky hinges in the world.

Retail in America

Yesterday I was at REI shopping for hiking boots.

The prices for these boots run between $150 to $375. What is not readily apparent, but struck me nonetheless as I investigated, is that everyone of these boots…

…is made in China.

Every one of them.

You cannot buy hiking boots at REI without buying Chinese product.

I didn’t buy any boots though, I bought a new backpack.

I dug inside and found the tag:

Made in Vietnam. Yeah!

 

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Suicides at Apple’s Foxconn Factory

The Foxconn Factory in Shenzhen, China produces the iPhone. Worker conditions are so bad, pay so low, that there was recently an epidemic of suicides. The company installed suicide nets at the dorms.

The Success of KFC

Yesterday evening Trisha and I sat there looking at each other with no idea about what to have for dinner. So I went all out – only the best, classy that I am – and “took her” to KFC for some chicken.

Sometimes the craving just hits. We were the only “dining in” customers, and we sat at a shabby formica table enjoying our meals eaten out of cardboard and plastic, while teenagers paraded in and out and the drive-through was humming.

If I don’t go too often, I actually enjoy KFC. I order their original recipe and I generally like it.

I remember hearing about Col. Sanders (supposedly the founder and the guy on the logo picture) in motivational programs decades ago. When he got out of the military with nothing to do and not enough money to make it, he wanted to start franchising his chicken recipe. Nobody was interested. He went on the road and started knocking on doors. He was turned down, turned down and turned down. Legend has it that he was rejected by more than 1,000 owners of restaurants before he convinced the first one.

Today, every day, more than 12 million customers are served at KFC restaurants in 109 countries and territories around the world. KFC operates more than 5,200 restaurants in the United States and more than 15,000 units around the world. KFC is world-famous for its Original Recipe® fried chicken — made with the same secret blend of 11 herbs and spices Col. Sanders perfected more than a half-century ago. Customers around the globe also enjoy more than 300 other products — from Kentucky Grilled Chicken in the United States to a salmon sandwich in Japan.

In China alone, starting with one restaurant in 1987, KFC now operates 3,200 KFCs stores. Col. Sanders’ picture is far more popular and displayed in China than that of Mao. Their target is to have to 20,000 stores in China. KFC is far more widespread in China than McDonald’s is, the world’s largest restaurant chain.

So what is my point? The seemingly runaway success of 15,000 stores worldwide, with far more to go, did not come by accident. If Col. Sanders, more than 50 years ago, had stopped knocking of doors  after 999 tries, there would be no KFC today. A good chicken recipe made KFC, but perseverance and iron will, against all odds, against better advice, is what really created the company.

Ruminations About Market Research

Thoughts by Steve Jobs [per Walter Isaacson’s book]:

Some people say, “Give the customers what they want.” But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!'”

People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.

Quote by Wayne Gretzky:

I skate to where the puck is going to be, not where it has been.