Kobe Bryant – Work Ethic and Perspective

There are people who evoke something, emotion, from you. Kobe Bryant was one for me. His game is not the style I prefer. But it was successful. Five championships on the court.

Impressive.

Even more meaningful was his work ethic and his perspective. See his retirement speech. This portion is what life’s all about.

“Lastly our daughters, Natalia, Bianca and Gianna. You guys know that if you do the work, you work hard enough, dreams come true. You know that, we all know that. But hopefully what you get from tonight is that those times when you get up early and you work hard; those times when you stay up late and you work hard; those times when don’t feel like working — you’re too tired, you don’t want to push yourself — but you do it anyway. That is actually the dream. That’s the dream. It’s not the destination, it’s the journey. And if you guys can understand that, what you’ll see happen is that you won’t accomplish your dreams, your dreams won’t come true, something greater will. (Points to the rafters). And if you guys can understand that, then I’m doing my job as a father.”

Principles: by Ray Dalio – A Book Review

Summary:  Why should you care? You can pick up Principles, by Ray Dalio and turn to any page and learn something. Ultimately its a wonderful collection of well thought out “How To’s.” It is filled with great examples, visuals, and sensible approaches. Perhaps its greatest strength, terrific approaches to life and business, becomes its weakness. For most of the 567 pages it lacks the human connection. And in that sense Ray Dalio is as real to me as Socrates.

*Day Dalio wrote a follow up book to Principles called Principles for Success. It is organized to be more easily consumed. My biggest criticism of his prior book, the length, is addressed. See this review for more: Billionaire Ray Dalio Adapts His Communication Strategy To Reach A Wider Audience

principles book cover

Detail Review: I start with aesthetics. The hardcover book is well constructed. It’s black with white “PRINCIPLES” and red “RAY DALIO.” The font is large. Pages go by with relative ease. There are visuals throughout as well. For a hearty book you need some pages which go by quickly. They help the sense of achievement. I’m also a fan of ribbon book marks. When the book is on its side I like to look and see how far down the page the marker is. Again, accomplishment.

rules of thumb book cover

Before we get into the subject of the book, I’d offer another: Rules of Thumb by Alan Webber. It has 52 rules which are each about three pages in description. It is easy to consume and with deliberation, easy to put into practice. For more see my review: Rules of Thumb – A Review

On to the subject of the book: Principles. How I think about principles is certainly as a sort of ethical code. That if you live by them then the results are something you can mentally reconcile. To get reflective for a moment. Life is short. One day you will want to look back and say “I lived a proper life.” Perhaps not virtuous, but fair.

This was never truer than with the death of Socrates. At the bottom of the review is a video highlighting the debate: be loyal to your principles and die. Betray them and live.

You’d want the same for your organization. You’d want it organized by Principles which reflect your values. Follow with policies, standards, and procedures. This creates a clear lineage between the type of company you want to be and the one you actually are.

Back to the book. It is divided into three sections: An introduction, life principles, and work principles.

The introduction is perhaps my favorite part. Dalio is very transparent especially as he describes his upbringing. He isn’t a good student in school; the subjects didn’t interest him. He buys some stocks with money he earns caddying. At first he thinks he’s smart, but realizes the market itself was doing well. He goes from college, which he loved, through the building of his company. Several stories of the ups, the downs. He has a few realizations through his journey. A major one is to learn from his mistakes and to codify them. This evolves to be his principles.

Next is the Life Principles. This is my next favorite section. These can be applied without an organization. They are like a new year resolution. Or perhaps a personal constitution. If the book ended after this section, it would be worth every penny.

Last is the Work Principles. It comprises much of the book. Each one is useful, but they are best served reading in chunks and not in long reads. This influences my overall view of the book. More than half of it is best read not as a story, but as guidance.

So what are the “Principles?” He has several. Perhaps the easiest ways to get them is through Twitter and Linkedin. Dalio posts them practically daily. But here are a few I pulled out.

The principles are chapters and are numbered. Then there are mid-level principles designated as a decimal e.g. 1.1. Finally, there are sub principles, which are letters such as 1.1a.

Life Principle 1 – Embrace Reality and Deal with It. I like this one because people, myself included, like to rationalize, tell themselves stories, and avoid tough decisions. Its better to face reality and act accordingly. Luck won’t save you and eventually no one else will. Creating the discipline to see your future and make it happen is such a valuable thing to live by.

Life Principle 1.8 – Weigh second- and third- order consequences. This is a nuanced principle. Most people solve the problem in front of them not realizing the solution may have created new or different problems. For example, suppose you excercise to lose weight. You have a good routine and get a sweat. Later when it’s time to eat you prepare a little more than normal. You’re really hungry because you’re expending more energy working out. But now you’re also eating more to compensate for the deficit in calories. So you can’t just excercise, you also have to diet. The first order consequence was addressed, but not the second and third.

Life Principle 2 – Use the 5-Step Process to Get What You Want Out of Life. This process is referenced several times throughout the book. Check out the visual:

raydalio-five-step-process-1

Life Principle 3 – Be Radically Open-Minded. Being open minded allows you to understand problems and the solutions for the possibilities that created them. No one and nothing is perfect. To get quality results being open to different perspectives, viewpoints, cultures, and ways of doing things is necessary.

Work Principles – An organization is a machine consisting of two major parts: culture and people. He presents this via this visual. As the Work Principles unfolds he goes further into each aspect.

dalio2

Another major tenet of the Work Principles is the Idea Meritocracy. He pushes his company, Bridgewater Associates, to have an Idea Meritocracy which is defined as Radical Truth + Radical Transparency + Believability-Weighted Decision Making. They realize this vision through consistent feedback and constant evaluation. While good in theory, I don’t think in practice this is for everyone. Dalio acknowledges this reality and says many individuals sort themselves out of the company as a consequence. I wonder if talented individuals are missed out because of this structure? I assume so, but Dalio believes the benefits outweighs it.

Work Principle 3 – Create a Culture in Which It Is Okay to Make Mistakes and Unacceptable Not to Learn from Them. This principle isn’t controversial. You want people who are eager to make a difference and take on an acceptable amount of risk. Learning from situations is by itself a benefit. Its likely you can apply those learnings elsewhere. Thomas Edison once said he didn’t fail in making the lightbulb. He found 2,000 ways to not make one. And only needed to find one way to make it work.

Work Principle 6.4 – Once a decision is made, everyone should get behind it even though individuals may still disagree. I’ve seen passive agressiveness first hand. People will agree to a decision in a formal setting, but then walk away and not truly commitment and at times undermine it. Organizations need to work to prevent this, whether through culture or through other mechanisms.

Work Principle 9 – Constantly Train, Test, Evaluate, and Sort People. This is one section I felt worked best in theory. As I read the book I got a sense this is what they do, but the human side of it must be taxing. If you’re constantly being sorted and evaulated, (perhaps a reality anyway), you never really relax. You are constantly looking over your shoulder. If people are compensated a certain way I could see this being less of a concern i.e. they make enough to cover expenses like a house. But if they don’t you’d get people who want to maintain the job. When this principle is tied to Work Principle number 3, the mistakes oriented one, you have to balance it. Take risks and learn versus being constantly evaluated.

Work Principle 16 – And for Heaven’s Sake, Don’t Overlook Governance. Having an infrastructure where accountability is built in is very important. It ensures hubris and proper risk taking is addressed on an ongoing basis.

Tidbit – I really like the example of how to tell good stories. He describes a process where the story has things that happen, but then shows for some parts of the story you want to provide more detail and context, but if you do that too much or don’t keep the story on track you’ll lose the audience.

Summary – The book is terrific, but its girth makes it a bit sterile. Telling stories, as discussed in the book, is a great way for people to connect. It needs more of them. Inspiring? Not really. Good read? Certainly. But only in chunks.

For inspiration, check out this thrilling, just kidding, 40 minute clip of Socrates.

5:45 mark – The majority opinion – they can’t be trusted

8:23 mark – Can’t expect me to change my ways now – being consistent, in good and bad times is part of the contract with the city or as the Principles book describes, the company.

9:06-13:45 mark – the essence of the argument and the part that reminded me of this book.

20:25 mark – A philosopher and death.

24:18 mark – The argument for the soul using opposites.

33:00 mark – An interesting metaphor of the soul and a musical instrument.

Reflecting on a Job Market – Employee and Employer

To gain significant wealth in the US you have to take significant risk. Usually that means starting your own business or being on the ground floor with someone who is. The individuals who put their neck on the line deserve the spoils of that risk. The last three years proves the fittest survives in business.

We can somewhat reflect now. The once in a generation economy is behind us, so it’s time to see what the new world looks like. It’s lean and flexible. But a chasm is growing between the employer and the employees. Here are some stats from a Mercer survey I read about by Ben Rooney on CNNMoney called  Half of Workers Unhappy in their Jobs:

  • 32% of US workers are seriously considering leaving their job. Up from 23% in 2005.
  • Of the age group 25-34, 40% are seriously considering leaving. Within that number is 44% of employees who are 24 and younger. The cheap labor is ready to bolt.
  • And more alarming, 56% of senior managers are considering leaving. This compares to 34% of managers and 30% of non-managers. The experienced are also looking to jump to other opportunities.
  • A slightly different take, but 21% have disengaged from their employer, meaning they are not looking for a new job, but they are apathetic toward their current one. This could be burn out and it could mean the productivity gains via personnel has reached it’s limit.

Workers are getting disenfranchised by the circumstances of their employment. In addition to that, there are business owners who have moved away from the proper perspective. They’ve had leverage for over three years. Chances are they laid off some people. Those that remain should have a debt of gratitude. It could be worse.

The business owner who has survived is entitled to some fun, but they need to realize no one does it alone. I was out to dinner with a friend in the industrial fabrication and installation field of work. He had an exchange with his boss similar to the one in the movie below. I embellished it for effect, but much of this exchange is true, particularly the part about the water skis
http://www.xtranormal.com/watch/12155321/a-resignation-story

6.5 Graphs Outlining the US Economy

I’m in a room that’s 8 feet by 10 feet. It’s just me. There’s a small box playing loops of TV shows, but I’m ignoring it. The temperature is 95 degrees but its cold in here. And I have a lot to think about.

I know I’m going to pay for it. Situations like this require penance and it’s going to cost me. It’s part of life though and inevitably I’ll be back.

The bill was a shade under $200. Frankly it could have been a lot worse. My car hasn’t been serviced in a year; it needed an oil change, inspection, tire rotation, and the radiator hose had a hole in it. I paid for the car, but I got time to think.

This cycle of activity drove me to consider the business cycle. It normally looks like a sound wave with peaks (good times) and valleys (recessions).

Are we still in a recession? Are we in an initial recovery? Maybe even an early upswing? Chris Stuart wondered the same thing in his write up Why We’re At The Early Upswing Stage In The Business Cycle.

I predicted the recession after observing a lack of income appreciation and buying patterns changing in October 2007 and although this is a classic supply and demand cycle where aggregate demand is lacking it feels more structural. Structural means the skills needed in the employment arena are lacking in the environment, so a transitional period of training is required. Instead of a sudden shift in skills we have an elongated one. Globalization dramatically changed supply chains and created liquidity in the job market. Goods producing jobs like manufacturing are now feasible almost anywhere. And the education advantage of the US is no longer prevalent.

This is forcing the US to consider it’s jobs strategy, or at least create one in the first place. Many of the assumptions about the viability of the US worker are no longer true. And think about the US consumer. Will they always buy? Like an alarm clock introducing the morning, the US worker and US consumer realized better days are not guaranteed. People are starting to slowly de-leverage. It’s a huge adjustment in the way people live their lives and it will take time. The debt burden is simply too great.

So if this cycle is a classic supply and demand recession and the US consumer isn’t going to buy (low demand) then isn’t this going to take awhile? Yes, the rest of 2011 and 2012.

Here’s my outline of the timescale:

Jobs will be tepid but consistent for the rest of the year and next. Companies large and small are getting creative with their resources. Many are investing in equipment rather than people (you don’t need to buy health insurance for an industrial printer), but the gains will be positive. There is no double dip recession.

The best workers are beginning to jump to other opportunities. They’ve installed micro-innovations for their current employers, but since volume has been low these improvements haven’t knocked anyone’s socks off. But they will.

So after a period of discipline, brighter days are ahead.

——–

I wanted to pull together some graphs showing what’s happened since the beginning of 2008. Below are four time-scaled illustrations showing the situation with jobs.

  1. The first one is the overall jobs report. It shows how far we have to go to balance out the lost jobs.
  2. The second one is a growth rate of jobs for the private sector as they relate to Service Producing and Goods Producing industries. Goods Producing encapsulates manufacturing and construction, two of the harder hit industries. 
  3. Since the ratio of Service Providing jobs and Goods Producing jobs is 5 to 1, I wanted to show the relative impact and that is what the third graph depicts.
  4. The last one the Dow Jones during the same period. It’s the index that most people focus on as a reflection of the stock market.

Lastly, Wired did some research with Linkedin.com about what terms people were using in their titles after they changed jobs. The results below reflect a pool of 7 million linkedin users and a good indication of what jobs are in need in this day in age. But remember, people still need an oil change.

Working Thoughts 6/15/2010
We Respond To Cues Very Effectively

Working Thoughts 6/15/2009
Resilient Attitudes are Rare

When Ideas Come Together

I sit here and type. Sometimes I have inspiration and sometimes its a slog. I do it because I love when ideas come rushing in. It’s like the end of the Usual Suspects when everything comes together. Its powerful and rewarding.

Good mysteries are fulfilling because we have to hunt for clues. They are rarely obvious and they are as much a study of logic and circumstance as anything else. It’s in our DNA to problem solve this way.

For this reason I’m optimistic about the long term future. The connectedness of the world is bringing figurative detectives together, each with their own clues, to solve problems. Ideas have a better chance to grow. Incremental improvements are good, but we are after leaps forward.

Take this chart from CNNMoney.com about Cisco’s prediction on the expansion of the internet.

And check out these videos from Steven Johnson about where ideas come from. The first one is a short artistic explanation and the second is a TED Talk. I really enjoy the story at the end.

–>http://video.ted.com/assets/player/swf/EmbedPlayer.swf

Defining the Future for the Class of 2011

Congratulations to the class of 2011. You’ve earned the gratification of moving your tassel from one side of the cap to the other.

What does the future hold? What is out there? You’ll be told to find yourself, follow your passion, and chase your goals. And many of you will wonder what those are. There’s debt, perhaps an entry level job, and monthly bills. Before you can commit to your boundless dreams you already have these torments and everything that goes along with it. Chances are you’ll be figuring out credit cards, bad bosses, and hung over early morning meetings. Every day is a new day.

If you learned anything in school, I hope you’ve learned how to think. To ask why? Anyone can follow directions, good thinkers are people who understand why they exist. Great thinkers design the instructions. What is the path? What are the steps? “If this happens, then do this” and the decision tree associated with it. Working through these scenarios develops an ability to cope with complexity. Said another way – for greater enlightenment, do you want a happy meal toy or a jet engine?

And I beg you to create something. The world is a better place when people work to assemble rather than tear apart. If you’re a business person I’d start with thinking about value proposition. Think about a situation and how things work together. What is the context for which a transaction operates? Consider the decisions people are making and the information they are using. What drives them to act and is the desired behavior? Is there a status quo? Have people accepted things as they are?

The world you experience is very different than the world I know. And that is good. There are generally two types of knowledge explicit and tacit.

  • Explicit Knowledge – is knowledge that has been or can be articulated, codified, and stored in certain media. It can be readily transmitted to others. The information contained in encyclopedias (including Wikipedia) are good examples of explicit knowledge.
  • Tacit Knowledge – involves learning and skill but in a way that is difficult to transfer from one person by means of writing it down or verbalizing it. Tacit knowledge can consist of habits and culture that we do not recognize in ourselves. I can tell you how to ride a bicycle, but you won’t know how until you learn to balance.

Graduation means you’ve probably spent close to $1,000 on books over the last few years acquiring explicit knowledge. You’ve studied in your dorm room and memorized facts about amortization. You’ve read what the top of Kilimanjaro looks like.

Now is the time to look yourself. It doesn’t have to be the top of a mountain, a high point works just fine. Experience the edge and feel the risk. Trace the path you’ve taken to this simple point. Once you’ve climbed one high point, you’ll climb another and another.

Nothing worth doing is easy and life isn’t fair. Your experience is unique, always ask why, and focus on creating something, anything. And remember, every day is a new day.

Huge Layoffs and What They Mean

I got a great email from Rose King of Accountingdegree.com the other day. She shared with me a blog entry they authored about 13 Huge Layoffs. Below is an excerpt from it.

I’ve always been fascinated by layoff announcements. Not in a positive way, but in a curious way. It prompts questions about what went so wrong? I tend to group these reductions in one of two ways.
– The first is as a communication to their shareholders that they are working to reduce the imbalance built up in the cost structure. Usually, this is when the number of people is very high. A classic example is when orders have fallen off over an extended period and the company needs to face the music.
– The other is when the bottom line is going to be missed and the executives need to find a few million dollars. Usually this isn’t a high number, but rather its individuals with high compensation.

But both are an admission that the strategy isn’t panning out. The company should state what is changing in their business plan or their focus. Is the product portfolio no longer innovative? Can extraneous business units be sold off? and so on.

The sports fan in me is wondering when we’re going to hear about mass layoffs by the NFL? I guess pay cuts have already begun.

The other aspect of this blog entry that grabbed my attention is how most of these are fairly recent (within the last decade).

These days, many Americans are suffering at the hands of layoffs,
but mass job cuts are hardly a new thing. Often a result of new
efficiency or simply running low on cash, thousands of employees can be cut at a time. Here we’ll take a look at 13 massive layoffs in American history.

  1. Intel:
    In 2006, Intel announced a major restructuring that included the layoff
    of 9,500 employees, and an additional 1,000 managerial jobs. Then in
    2009, Intel closed chip plants, resulting in up to 6,000 layoffs.
  2. Microsoft:
    In its then-34th year of business without mass layoffs, Microsoft cut
    an initial 5,000 jobs, and even more by the end of 2009. The layoffs
    came in response to a major loss in profits and a need to reduce
    operating expenses and capital expenditures.
  3. Airlines:
  4. Citigroup:
    In 2008, Citigroup laid off 52,000 employees, making up for massive
    write-downs. The number of jobs cut by Citi is about the same as the
    total amount of cuts in the entire US financial services industry in
    2006. As New York City’s second largest private employer, Citi’s
    layoffs had a major impact on the city, as well as Citi stock.
  5. Merck:
  6. Dow Chemical:
  7. US Postal Service:
    The public workforce is not immune to layoffs, as evidenced by the USPS
    cut of 7,500 administrative positions. This cut impacted 2,000
    postmasters, which will likely mean closing the post offices they
    operate.
  8. HP:
    After an acquisition of Electronic Data Systems Corp, HP cut 7.5% of
    its workforces fo realize savings. That amounted to a cut of 24,600
    jobs over three years. Additionally, HP announced plans to spend $1
    billion and cut 9,000 jobs over three years to move to fully automated
    commercial data centers, with job cuts stemming from automation and
    productivity gains.
  9. Borders:
    The popular bookstore Borders announced plans to close 200 of 488
    superstores as part of a bankruptcy protection filing. These closings
    resulting in the laying off of 6,000 employees out of 19,500.
  10. IBM:
    IBM made drastic new cuts in 1993, letting go of 35,000 jobs as part of
    an $8.9 billion program to cut costs. The company also let go of some
    factories and equipment, shuttering plants. The measure was applauded
    by investors, and was praised for being a clean, drastic cut, rather
    than dragging out painful layoffs over several years. Employees were
    given incentives to leave, and there was also an early retirement
    program to encourage a positive outcome for both employees and the
    company.
  11. NASA:
  12. Automakers:
  13. Pfizer: