EclecticLip

Phil Rosenzweig’s The Halo Effect was the 21st book covered by the book club, and was deliberately chosen to complement (and contrast with) Good to Great, read some weeks prior.

Rosenzweig’s contribution to management literature has been to illuminate the irrigourous thinking that underlies much business/management popular wisdom and their associated memes.  More precisely, his contribution has been to write a popular book on the subject (no doubt many perfectly-obscure authors pointed this out before him).

In a business context, the “Halo Effect” for which the book is named is the phenomenon of observing successful businesses / business people, and concluding the common traits are what make them successful.  A more perspicatious researcher would test whether these common traits are present in unsuccessful companies, and whether these traits are quantifiable or merely qualitative.  Business writers also tend to succumb to a steady-state fallacy — the assumption that success can be codified into permanence — when mean reversion happens to even the best companies, given sufficient timeframes.

As always, if you enjoy the book summary, please consider supporting the author by purchasing a copy. 

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The Halo Effect - summary

In The Responsibility Virus (volume 20 of the book club reading list) Roger Martin discusses the tendency of Boards of Directors to become powerless yes-men, when faced with a domineering CEO.  This is in contrast to their intended role as wise greybeards, advisors or even coaches who keep the Chief Executive on the sraight and narrow.

This seems vaguely analogous to what happened to the Roman Senate as their Empire declined; instead of keeping the Emperor in check, they had to curry favour for fear of their personal safety (and probably family fortune, too: I imagine more than one Senator got his possessions confiscated).

It would be interesting to know whether the advisory influence of large corporations’ Boards of Directors tends to be weaker at firms where the CEO is paid more.  The Wall St. Journal recently carried an article reaffirming that power corrupts; in their context, as people gain power, they act more like jerks.  Transposing this lesson historically, maybe if Marc Antony had won, Caligula would’ve ended up as a very polite cobbler…

We read The Human Side of Enterprise recently, wherein Douglas McGregor (that’s McGregor, not MacArthur!) contained the wisdom nugget that:

“management gets the labour relations it deserves”.

I doubt McGregor coined the expression — it’s the kind of pithy phrase that floats around for years before being credited to a famous person — but it rings no less true. 

The general theme is a karmic one: if management mistreats labour, labour will eventually form a feisty union.  And contrarily, if management treats its employees well, union relations will tend to be amicable (if there even is a union).  Furthermore, while trust and respect grow slowly over time (like pearls!), bad memories have a way of lingering for a very. long. time.

In that context, I wonder if management in the West is still paying for the bad karma it earned during the Industrial Revolution.  If the explosion of industrial wealth was shared more equitably, or barons weren’t so slow to improve working conditions / recognize workers’ rights, perhaps labour unions wouldn’t've become so militantly anti-management.  Heck, maybe Marx and Engels wouldn’t've even been inspired to write their little pamphlet!

I’m perfectly unfamiliar with labour relations / extent of union militancy in other countries, but it would shock me if the Nordic economies (or Japan, with its fairly egalitarian corporate pay scales) have similarly confrontative labour relations.  After all, it’s difficult to have a class struggle if the different “classes” of employees (management, labour) enjoy reasonably equitable pay, and decent working conditions.  And I’d expect that economies with a heritage in the British Industrial Revolution tradition (US, UK, Canada, Australia) would have more confrontative unions.  After all, those union traditions would’ve been born in a desperate context of obscene wealth and even-more-obscene squalor.

So it would seem reasonable to consider militant unions a form of karma — a carryover from the bad ol’ days (correction: the very bad old days) of the Anglo economic tradition, when owners really should’ve cared more about their employees.  And given how long it can take for bad karma to dissipate, I imagine confrontational labour relations will be a feature of industry in these cultures, for a long time to come.

(Originally written August 4; posted Sept 5) 

While shopping on the weekend, I noticed some funny packaging on the Hellman’s mayonnaise containers.  So, like a piqued bee browsing the flowers, I wandered over for a closer look.

Turns out that in North America, all Hellman’s “half the fat” mayonnaise now uses free-range eggs — thirty million jars’ worth in fact.  They’d attached some promotional stuff to their mayonnaise jars; clearly, in my case it worked. 

While light mayonnaise is their only product using free-range eggs in North America, all Hellman’s mayonnaises in Europe switched over last year.  The reason we’re behind the times… is because they weren’t sure if there was enough North American supply for their full product line (!). 

This is an excellent example of how activists can co-opt private enterprise into behaving better.  Free-range eggs are more expensive because the hens have access to the outdoors, instead of being cooped up under terrible conditions; they’re also more humane, for the same reason.  By getting enough “early adopters” to to pay a premium for the free-range product, activists created a big enough market signal for behemoth corps to take notice.

In this case, Unilever has decided to get an edge on Kraft (”Miracle Whip”) by making this change.  Hopefully, Kraft will respond by trying to one-up Unilever in the “ethical sourcing” sweepstakes.  The incremental cost of free-range eggs is largely irrelevant to the products’ profitability, as both Hellman’s Mayonnaise and Miracle Whip are brands, and are priced as such.  They don’t compete with no-name spreads, just as Coke doesn’t worry about “PC cola” and BMW doesn’t care that Kia’s are cheaper. 

Other food examples include fair trade coffees and Cadbury’s fair trade sourcing of chocolate for all its British “Dairymilk” bars.  On the consumer side, after a Greenpeace campaign Apple recently beat its PC competition to removing arsenic, mercury, PVC and brominated fire-retardants from various components.  And the success of the first-generation Toyota Prius (despite its Aztek-esque aesthetics) prompted automakers to start looking into hybrid technology.

While cynics point out that hybrid lifecycle costs are probably higher in North America, we’re a bit of an anomaly.  Since Texas used to be the Saudi Arabia of crude, and Alberta promises to be the next Saudi Arabia of oil, it seems unlikely we’ll see the kinds of gas taxes found elsewhere in the world.

Over the months, one of the themes for book club selections has been self-knowledge; a tradition that goes back to the “Know Thyself” carved into the side of the Temple of the Oracle of Delphi (and surely earlier still).  As a side note, “Nothing in Excess” (the old golden mean of Aristotle) and somewhat more verbose “Make a Pledge and Mischief is Nigh” were also apparently engraved into the structure.

Given the interest in self-knowledge, Gerd Gigerenzer’s book Gut Feelings — a primary source for Malcolm Gladwell’s Blink — was a natural fit.  Gigerenzer’s data supports the idea that less is more, an idea with enormous implications when it comes to data analysis for the modern researcher / knowledge worker.

As always, if you enjoy the book review, please consider supporting the author by purchasing the book. 

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Gut Feelings - summary 

I recently had a chance to catch up on some podcasts.  (Much like my “not-yet-read books” bookshelf, I’ve got many a megabite of unheard podcasts on my hard drive.)  This one was a CBC Ideas episode called The Moral of the Story Is; it’s dated March 22 2010.  It starts off with Bertrand Russell’s remark that:

“Most of the greatest evil that man has inflicted upon man comes throuhg people feeling quite certain about something which, in fact, was false.”

Partway through, the narrator interviews one Dr. Robert Burton, a neurologist at Mount Zion University of California Hospital.  At about the twenty-minute mark, he suggests that the brain’s reward system activates, when one has the sense of being right — in the same way it activates when people smoke, drink, use drugs, or engage in other addictive behaviours.  Basically, feeling indignant gives you an upswell of (bio)chemical pleasure.

At about 22 minutes, there’s a wonderful exchange:

Narrator: are you suggesting Bill O’Reilly is some sort of junkie, in a way?

Burton:  I’m not suggesting.

This rings true for me.  I’ve experienced the intoxicating sense of indignant righteousness when arguing with people who were “clearly wrong”.  Nowadays, I try to maintain an unrippled calm; and temper any anger with humour.  My media habits reflect this: I used to enjoy listening to American progressive talk radio, but now tend to find it agitating, again on account of the subsurface exasperation.  Of course, that’s nothing compared to what relatively little I’ve experienced of its conservative cousin.  I prefer The Daily Show, Colbert Report and Bill Maher, as their jeremiads are leavened with humour.  Our modern jesters, I suppose.

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While Dawkins maintains his composure here, he carries a lot of anger — indignation — towards the shallower strands of various religion traditions.  If memory serves, he gives Buddhism a pass in The God Delusion; his real problem is with literalism in the Abrahamic faiths, and Christian fundamentalism in particular.  Brutish and backwards as they may be, they’re not worth tripping into addictive indignation over.  Surely other approaches are better.

Workplaces, like consumer products, involve the interplay of multiple systems: everything from accounting to manufacturing to research to… uh… the zeitgeist-tracking of a marketing department needs to work together reasonably smoothly.

The book was found on a pilgrimage to Powell’s Books in late 2009 and immediately targeted as a future book club read.  While most companies work together reasonably smoothly, those companies whose departments function with seamless ease, are likelier to enjoy greater success.  (Such is the Darwininan nature of business.)  As such, learning more about how complex systems function, was thought to be of high value.

As always, if you find the summary useful, please consider supporting the author by purchasing the book. 

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Thinking in Systems (summary)

Innumerable sources talk about how peer recognition matters for more people than money… though the latter itself has some importance too.   

I imagine that at most companies, pay is assigned at approximately market levels based on the responsibilities incurred.  As such, CEO pay tends to drift higher than junior engineer pay, because the market has been assigning a higher value to the former — despite the many examples where this has proven incorrect. 

For their part, markets are mechanisms for establishing the price of a good through transactions, based on perceived value of the participants.  If not enough buyers feel a banana is worth $3, they will tend not to buy until the price drifts to levels they’re willing to pay; if not enough sellers feel a banana is being properly valued at 3 cents, they will tend divert their productive elsewhere, until the price rises. 

If we call the grouping of people in a market “peers” we could easily say market prices are a peer phenomenon — a peer assessment of value of the service / good in question, such as a year’s worth of junior engineering time.  Market prices are a form of peer recognition-of-value, or to be more precise, peer perception-of-value.  Presumably , if Ahab makes more money than Baal, that means he’s perceived to be more valuable.

In which case pay serves as a proxy for peer recognition (how you’re recognized among your peers, and/or by your peers, depending how hierarchical one’s firm is).  Which would go a long way towards explaining why it can be such a sensitive subject…

In light of the company’s focus (energy) a decision was made to cover a few books about the energy sector.  Jeff Rubin’s wordily-titled book on the subject of peak oil — or at least, peak cheap oil — was chosen as the first volume of what has turned out to be (thus far) a trilogy.

Since few of us can relate handily to the volume of a barrel of oil (about 160 litres), and thus price-per-barrel numbers are somewhat abstract, the book review includes Litre-equivalent-prices to accompany the per-barrel figures.  While numbers like $80 / barrel sound expensive ($80 is a fair amount of cash after all), putting this in the perspective of it being 50 cents per Litre, provides valuable context.

As always, if you find the summary useful, please consider supporting the author by purchasing the book. 

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Why Your World (summary)

James Hoggan and Richard Littlemore’s public-relations handbook Do The Right Thing was the fifth volume covered in the book club.  The book’s selection was part of an effort to broaden the team’s exposure to ideas not generally covered in engineering education or their day-to-day work. 

The book was covered in late 2009.  Given that the Olympics would descend on Vancouver a few short months later, a book on public relations seemed topical.

In the interest of disclosure, I should note that I’ve had the pleasure of corresponding with both authors.  Given that I’m concerned about the framing of environmental issues, and not averse to sending emails to complete strangers, and given that Hoggan & Associates is a leading Vancouver PR firm with an interest in environmental issues, it was probably inevitable our paths would cross.

As usual, if you consider the review useful, please consider supporting the authors by purchasing the book.

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Do The Right Thing - summary