Category Archives: Etc

Critical Thinking is Rethinking

Words 434

The following was inspired by an email sent to one of my critical thinking classes last year. 

Dear Team,

1) There is no right answer. There are only better ones.  Remember, “A cup’s usefulness is in its emptiness.”  You are all experienced, educated people who are accustomed to finding the right answers.  You will have trouble setting that aside, but you must try to empty your cup so that you come to questions with a broader, more open mind.  It may be a bit unsettling to you, but the cases that we deal with are intentionally vague.  There is no concrete final answer that we must find.   Our challenge is to come to a better answer, rather than the answer.

2) Reading into the case what you think it should be about.  Our recent exercise had one primary aim: Help you to identify your assumptions or bias.  How you define the terms of the case leads you to your conclusion.  To insist that your position is correct is to miss how much you read into the case – how much your personal bias influenced your understanding of what the problem was and the solution should be.

 3) Winning an Argument vs. Useful Discussion.  Some of you were rather stubborn about your positions – that you had the right analysis and decision.  If you are still insisting that you are correct, then you are not thinking, you are competing:  You want to win and feel that you are right if you win.

 4) Critical Thinking is Flexible Thinking.  One should never become so attached to an opinion or position as to disregard the critiques or counterarguments of someone who is genuinely interested in the issue at hand.  Setting aside your assumptions and arguing from an entirely different position is one of the smartest things you can do.  It allows you to view the problem with different definitions and assumptions – to step outside your biases. This is the value of being the Devil’s Advocate. 

 5) Critical Thinking is Rethinking.  By creating, or listening to, counterarguments you may identify the weaknesses within your argument and also the assumptions that are inherent in it.  After doing this, you may reconsider your original argument and refine it, or change your position entirely.  Changing your position is a reasonable, but difficult thing to do.  So, if you find this course challenging, that is a good thing.  Our aim is to challenge ourselves and to learn from each other.  As experienced, knowledgeable people we already know what we think.  Now we should try to learn what others think.  Our goal should be to understand how the world works, rather than insisting on how we think it should.

Carry on,

gil

(This originally appeared at Globis.jp, in a series on critical thinking.)

Encouraging Dissent

Words: 728

Few things are more satisfying than finding someone who agrees with us. We recognize a kindred spirit, giving us the sense that this enlightened soul’s depth of insight and undaunted intellect make our friendship almost preordained. It reaffirms our faith in humanity.  If only there were more like us, we could solve the world’s ills, couldn’t we?

Actually, no, we couldn’t. 

Not the world’s ills, not even our own tiny bailiwick’s.  We may, in fact, exacerbate the problems we are aiming to abate, creating more in the process. Being likeminded, we would make similar assumptions, frame the problem the same way, jump to similar conclusions.  We’d overlook the same gaps in our understanding and reasoning that might be glaringly obvious to observers outside our happy, agreeable jamboree.

In sum, no good decision ever came from an echo-chamber meeting, where all participants repeat the opinions of the leader.  What is socially agreeable can be intellectually dangerous.  Likeminded, agreeable people are great for socializing, but reduce the quality of decision-making where skeptical, argumentative minds are the most useful, yet often the least appreciated.

Finding someone willing to dissent thoughtfully and yet retain their loyalty to the decision – even if they don’t agree with it – is extraordinarily rare for two reasons.  First, as an executive moves up the food chain, the less likely his or her opinions will be challenged from below; second, the more difficult it becomes for an executive to listen to a dissenting opinion and give it the consideration it deserves. 

Encouraging dissent before a decision should be a priority for executive  — it is a chance to double check assumptions and review processes. It is the waterproofing of the decision, increasing the chances that it will float.

The problem is, however, that participants often feel disinclined to voice concerns.  Even teams with diverse backgrounds fall for this. There is an irresistible inclination to curry favor – even when the executive openly asks for dissenting opinions.  When the sword of power hangs over your head, one tends to humor the hand that holds it. 

The second problem – listening well enough to understand a dissenter’s position — is even more difficult because an executive becomes accustomed to being told he is right.  We are complimented on everything from our choice of chicken or fish during our biz class flight, to our jokes, regardless of whether they are funny, in the meeting.  Executives live in a biz class bubble.  And the isolation increases exponentially if said executive flies first class or via private jet.

 Arrogance and ignorance are complementary.  We become arrogant because we are certain of our ability and knowledge.  We often fail to see they limitations of both because we have made many similar decisions before and were right. We are accustomed to doing things right. This limitation of knowledge, our inherent ignorance, gives us confidence that we wouldn’t have if we knew more.

So how do we stop to listen?  We have to remember that nobody ever did us a favor by mindlessly agreeing with us.  The executive can help the dissenter by asking questions that help structure and focus the argument, so as to better understand the arguments basic premises.  There is a rule in logic argumentation that in examining an argument one should try to apply the structure that most improves the argument.  The reason is that one gains little from weak arguments, but a great deal from strong ones.

Often understanding an argument simply requires that we join the dissenting opinion and argue as best we can against our own position.  You might say to hell with that, it’s the dissenter’s job to make a good argument.  Yes, it is, but it is the executive’s job to make good decisions and the only way to do that is to listen different viewpoints and think about them. 

As long as the dissenting view is presented with thought and respect, as long as the dissenter understands that he may be overruled and asked to carry out a decision that he contested, it should be allowed.  Let’s call it loyal insubordination and let’s encourage it.

Ultimately, there will be limitations on time and knowledge that we can’t overcome, so different perspectives are crucial to obtaining the best decision within those limitations. In the end, we can choose between being told we’re right, or aiming at actually being right.

(This originally appeared at Globis.jp, in a series on critical thinking.)

Nine Things Students Taught Me

Words: 466

“Very little, but I learn a lot,” is the answer I’m most tempted to give when asked, “What do you teach?”  A bit smart-assed, perhaps, but personally accurate.  Over the years I’ve learned a lot about teaching from students.

Here’s a brief, incomplete list:

  1. Be happy – If the students are willing to be in class with you, rather than doing something else with their time, then you should be happy that they are there. I have never seen a good teacher who unhappy in class, but I have seen a lot of bad teachers who were. Being happy also makes the students happy, which is a great starting point.
  2. Be prepared – The guy playing guitar at the local coffee shop has practiced more at getting it right than most teachers. Don’t let it be true in your case.  Practice your presentation.  Take notes on when the questions were asked so you’ll be ready next time. Chart your time so that you know where the class is and where it needs to be at any given moment. Make sure your PC and projector work; open web pages and ramp up videos before class – no searching while students wait. Count out handouts before class and, if you can, distribute them beforehand. You want to see a class lose momentum? Give a stack of handouts to a student and say, “take one and pass it back.” Waiting is boring.
  3. Cold call – Randomly call on students whether they have raised a hand or not.  This is the best way to get everyone to pay attention and participate. Related to this is the no pass rule.  Nobody passes on a question. If they don’t know the answer, they get the next question, and warn them that you are coming back to them.
  4. No partial answers — A half-good answer is not a good answer so don’t accept it as one. Students know a bad answer when they hear it and pretending doesn’t fool them. Ask others to help complete the answer.
  5. Silence is OK – Students need time to think. Let them talk to fill the void, not you.
  6. Open-ended questions are useful questions Yes or No questions do not elicit thoughtful answers. Ask an open-ended question and then be quiet and listen.
  7. Napoleon had it right — Insubordination is often the sign of a strong mind. Allow it within reason. Thinking critically is, or should be, an act of loyal insubordination.
  8. Ask for more — Most students are only going to do as much as you ask them to do, or a little less. So ask for more.
  9. Be fair — Recognize hard work and reward good work.

There’s more, but I’ve to learned to stop before losing the audience’s attention.

(This originally appeared at Globis.jp, in a series on critical thinking.)

Fool’s Narrative: Dice Have No Memory, But We Do

(This originally appeared at Globis.jp, in a series on critical thinking.)

Words: 574

I once knew a man who loved to play the slots in Las Vegas.  He never came home a winner, but he insisted that he was.  His problem wasn’t luck he explained, “I’ll be playing slots for about hour – and I know it’s going to pay out soon.  But something will happen.  I’ll run out of silver dollars, maybe.  So I go to get more and when I come back a woman will be playing my machine and it will hit big.  It always happens that way.”

One could easily decide that a gambler this unlucky – who always left a machine just before it paid off – should cease gambling entirely.  That’s not the way the gambler saw it.

The gambler liked this story because he was portrayed as not without luck, but rather lacking faith in his luck.  In his narrative he always stopped playing just before the machine paid out.  Sometimes he stopped to order a drink, other times he went to get more coins, still other times he went to the restroom, almost always allowing someone else to reap the fortune that would have been his had he played a bit longer.

This narrative allowed the gambler to hold his head up, to not feel like a loser.  All he needed was just a little more faith, a few dollars more, and surely he would hit it big. The story fit his needs very well. He thought he could discern a pattern in all this and fit it into a nice narrative. When he won, that proved that he was lucky, especially after playing for a long time, because it rewarded his faith in his luck.  When he lost that simply meant that he needed to play a little longer.

His problem was partly the gambler’s fallacy: That each roll of the dice, spin of the roulette wheel, or turn of the slots, makes it more likely that a certain incident will happen. A gambler might think that if a roulette wheel comes up black five times, then it is more likely to hit red on the next one — that the previous results influence the probability of the next play. They don’t, the odds never change.  Roulette wheels, slots, and dice have no memory.

The gambler was also displaying a more common problem, which has to do with how we experience and remember events.  It was the confirmation bias, the inclination to focus on information that supports our beliefs, combined with memory errors, such as the highlighting of the unusual and the slighting of the mundane. (“When I carry an umbrella, it doesn’t rain.”)

Our memory clings to moments that stand out – particularly if they support what we believe.  Anecdotal evidence is powerful and our memory goes about sifting and sorting until we have a narrative that fits what we think.  It is the heavy hand of the past (as we remember it) weighing on the present.

Dice have no memory, but we do and that is a problem for us because we trust it so much.  So should we clear our memories and disregard experience? We can’t and we shouldn’t.  We know things — a lot of things — from experience.  The problem is that we don’t know as much as we think.  Worse, we’re unaware of this because some of our best stories, ones that are so important to us, may simply be lies we have told ourselves.

Logic Tree: Young Managing Director’s Dilemma

(This originally appeared at Globis.jp, in a series on critical thinking.)

Words: 1,298

A young managing director sat in the business class departure lounge staring out at the tarmac warming in the early morning light.  His laptop was open to the most recent financial report of his office. He had worked hard to improve the financial performance of his company and in the first year achieved record profits.  He had been very proud of that accomplishment and expected that in his second year he would lead the office to even greater success. Looking at the report it was clear that it had not happen. He was stunned. 

He had been out of the office for much of the first six months of the year, traveling overseas to meet with clients at their headquarters. He hadn’t time watch the numbers as closely as he did in his first year.  He knew his team was working well and he felt the CEO, who had been his advocate in the first year, would maintain the processes he had implemented throughout the company.  Still, the financials showed a steady erosion of profitability with expenses rising across all accounts.

What was wrong?

It is at times like these that a logic tree can prove useful.  The logic tree is a graphic representation of the systematic splitting of an issue into components. Beginning with broad categories and working to increasingly narrower categories, it eliminates all the relevant possibilities of an issue until a specific factor(s) is isolated that indicates that it may be the problem’s origin. Logic trees also help ensure that you have thought broadly enough that nothing has been overlooked.

With practice, creating a logic tree is less time consuming than not using one, but it’s not an oracle, divining the secrets of your business.  It is a simple tool that assists the user to follow a thorough, step-by-step analysis process. But it only tells you what you ask it to tell you.  Where you begin the logic tree determines much about what it will tell you: How you define the problem determines the questions you ask, and the questions you ask determine the answers you get.

For example, let’s ask, “How can I accumulate more wealth?” One person might first split the question into categories of  “reduce expenses” and “increase income.”  This person has assumed that he can reduce expenses as well as increase income and that these are the primary ways to increase his wealth.  Perhaps, another person will make the first split in the logic tree with “increase working hours” and “increase pay for working hours.” In this case, the person assumes that his expenses are already low enough and so focuses on increasing income, either through working more or being paid more.

In both cases the first split of the tree reflects how the user defines the problem — one person thinks of expenses and income, the other thinks of hours and pay. Neither is wrong, however, in both cases the person should be aware of the assumptions that are built into their logic tree. “Should be aware” is the key phrase here because often the person is not.  However, the logic tree, because of its graphical representation, facilitates that awareness — if not for the person making the tree — then for the colleague or friend who might look at it.

Back to question: “How can I accumulate more wealth?” Why not make the first split “Legally” and “Illegally”?  Selling a kidney, or robbing a bank will also allow you to increase your wealth – at least initially – by providing income beyond your current salary.  In fact, we could add that stealing food and gasoline will reduce your expenses. There are risks associated with both, of course, but there are risks with working too many hours and asking for a raise, too, though clearly less morally and physically dangerous.  The point here is not that you should consider illegal activities to increase your wealth, but that you should be aware of how you’ve limited the range of your question.  So when beginning a logic tree, take time to think about a broad range of possibilities, if you decide that they are not appropriate (you don’t want to do illegal things), then you can eliminate them.  The main thing is to broaden your thinking at the start of the logic tree. It can always be narrowed.

Some techniques that help broaden your thinking:

— Decide what it is you want to know. Then create a logic tree that answers the question.  Now, step back and broaden it by adding a split in the tree that would occur before the first split you made. If your first logic tree was based on “How can I lose weight?”  Broaden that by changing the question to “How can I live a healthier life?” Now “losing weight” is a later branch.

— Rephrase the question: “How can I accumulate more wealth?” can be changed to “How can I save more money?” or “How can I earn more money?” or even “How can I increase my disposable income?”  All these change the definition of the problem and the structure of your logic tree and, of course, what it will tell you.

— Lastly, and perhaps most useful, is to have your work reviewed by a colleague, a consultant, or anyone that gives you a fresh view.

Now, let’s return to our young managing director:

He took his seat on the airplane, waved away the offer of champagne by the flight attendant, and pulled a yellow legal pad from his briefcase. He made a list of what he thought were the key factors under the question, “What is causing the erosion of profit?”  He began a logic tree, but it didn’t feel right.  He tried another, “What is causing the steady increase in costs across all accounts?”  He worked on it for a while, the yen was holding steady, there were no significant changes outside the company to drive the prices up.  Was it an increase in labor hours? There was an increase, but only slight, definitely not enough to affect the company across all accounts. 

Finally, he circled variable expenses, but he didn’t have detailed information on these. He would have to ask the CEO.  He shook his head.  How could the other managers be so irresponsible and why was the CEO signing off on these sudden increases? Specifically, what were these costs? He made a note to arrange for a meeting with the CEO.  For now, he had more pressing matters – meetings with clients scheduled over the next three days.  He sighed and closed his eyes, and began reviewing the presentations that he would give.

Over the next several months the executive continued to travel.  He never had the full formal meeting with the CEO, who rescheduled repeatedly.  Instead, he made several pleading phone calls and followed-up with long emails regarding the rise in expenses. Finally, with profitability continuing to decline, he accepted another position and left the company.  Sometime later, he encountered one of his former team members on the street. He asked about the company.  The colleague shook his head and looked away. The CEO and two executives had to resign abruptly – there was suspicion that they had been using expenses to siphon money from the company. The young managing director’s jaw dropped. He had been looking directly at the problem, but had never considered it.

Looking back, we cannot say that defining the problem in broader terms would have led the executive to its source. The past provides clarity that the present almost never allows. We can say, however, that defining the problem narrowly did not help the executive at all.

 (The discussion of the logic tree was inspired by the work of Matthew Juniper, Cambridge University, http://www2.eng.cam.ac.uk/~mpj1001/MJ_teaching_pg.html)

Erroneous Assumptions

(This originally appeared at Globis.jp, in a series on critical thinking.)

Assume makes an ass out of you and me.

A high school baseball coach was the first person I ever heard say this. A teammate had thrown behind the runner – sending the ball to second base as the runner ran to third – an error that even a Little Leaguer would recognize.

The coach, red-faced and clenched teeth, but valiantly striving for patience, approached the player between innings: “The runner’s going to third, not second. Why in the world are you throwing the ball to second?”

“Coach, I assumed he would want to stop at second.”

The coach blinked for an instant – stunned, as if he’d been hit in the head. Then he let out a bellowing laugh and walked away shaking his head. He stopped at the far end of the bench. “You assumed he would want to stop at second? He’s playing baseball. He wants to run home just like everybody else. Son, let me tell you something: Assume makes an ass out of you and me, and don’t you forget it.”

Erroneous assumptions when exposed are often laughably foolish. Until then, they masquerade behind unquestioned respectability. Allow me to explain.

On a spring Sunday morning I ask my son, Andy, what he wants to do. We have time and weather with us. We are up early and the day full of possibilities.

He mimes riding a bicycle, “Bike riding.”

He’s an accomplished cyclist and so I offer as a destination Innokashira-koen, the big park near Kichijoji station. We’ve done the ride only once before so I know it will still be interesting to him. I’m concerned that it’s a long ride, following the Kandagawa canal, and he seems tired from the overnight visit to his aunt’s house, where he played a lot and slept little. But, I decide that we can take our time, stopping to play at the smaller parks along the way. If he proves too tired, we can turn back short of the destination and it will still be a pleasant ride. Soon, we are on our way, pedaling under the trees along the canal.

One of the first things we learn in critical thinking is how uncritical we are of our own assumptions. Perhaps, the most serious problem is that we have difficulty seeing that others don’t share our assumptions. We tend to think our audience understands us and that they can easily see our point of view point because it makes so much sense to us. When we receive an affirmitive answer to our position, we rarely check to confirm that the audience a) understands our idea, b) shares our assumptions about it, and c) is actually agreeing to what we proposed and not something else.

The first park we come to is in an older neighborhood and it seems that most of the children have grown up and moved away. Some areas in the park are even overgrown with grass. We play on a ship styled from concrete, but soon return to our bicycles. We ride on to a second park, a wide expanse sheltered by a giant ginko. The main attraction is a long slide with rollers, like a factory conveyer. We play a long time there. When we leave the sun is overhead and we can feel it.

As we continue along the canal, Andy begins to have trouble keeping my pace. Usually, it is the opposite. I ask several times if he feels good enough to continue and he insists that he does. We go on.

Assumptions help us to narrow our data into useful form. They make the cup we fill from the data firehouse, which, if left unconstrained, would overwhelm us. But assumptions can also be misleading, allowing us overlook important information. Too often we fail to ask why enough times because we like being quick with a decision as much as we like being right. Combine that with our inclination to assume that our audience shares our assumptions, and we have a potentially calamitous situation. We have no clue – or rather fail to note the clues — until it all is undone.

We stop at a third park — cool and dark, with a carp pond and a meandering stream. I watch Andy push his bicycle along the edge of the pond. The usual excitement in him just isn’t there. I buy a sports drink from a vending machine and he drinks some and brightens for a fleeting moment. Again, I ask if he’d like to turn back, and again he declines. We continue toward Innokashira, but the spirit of a forced march has descended on our excursion.

Soon, he lags far behind and then stops. I come back to him and offer the sports drink. He waves it away, “How much farther?”

We are still far from Mitakadai station. Beyond there the path widens into the park. We need to go back, or it will be a problem for him to return home. He begins to cry. I’m stunned. Why is it such a tragedy to turn back? It’s been a good ride. It’s been fun. Why in the world is he crying?

“I wanted to see the animals,” he says.

Animals — what animals? At that moment I’m as lost as my baseball coach had been. Animals?

When we are confronted by our erroneous assumptions, it often takes time to let them go. We don’t want to be wrong, let alone foolish. Sometimes, though, it takes just a few seconds because we may have suspected that we were wrong all along and it has become painfully clear.

Finally, I got it: Two weeks before on a school field trip, Andy had visited the zoo on the far side of Innokashira park. He had understood my offer to ride to the park as a ride to visit the zoo. He knew that he was tired when we started, but wanted to visit the zoo again. He wanted to show me the animals and tell me all the interesting things he had learned. Meanwhile, I had assumed that riding to Innokashira meant going there and turning around. Wasn’t it obvious? Of course, it was not.

I offer to take him the next weekend to visit the zoo – by train. He agrees. After a break at a convenience store, he gamely rides home.

How blithely we expect that we are understood and our assumptions are shared; that people know what we’re talking about especially when they agree with us. This is even truer for managers and team members under time pressure to execute. Sometimes, assume makes an ass out of you and me. Especially, me.

A Gut Feeling About Critical Thinking

Words: 571

(This originally appeared at Globis.jp, as the first in a series on critical thinking.)

Students don’t think. That’s easy for me to say, being a professor.

Neither do professors. That’s hard for me to say, being a professor.

More accurately, I should say, we don’t think enough. We might ponder a problem — even worry about it through an entire night.  It may haunt our day, making us edgy and preoccupied, but often we’re not really thinking about the problem in a useful way.  We don’t run through a complete process of defining the situation; finding the cause and which factors are most influential.  Even if we do apply critical thinking tools, we often stop once we’ve run through the process, without considering the alternatives or ramifications of our decisions.

We may think we are doing something like that, but usually we’re focusing on two or three key points based on our experience and our emotional preferences.  We rely on a handful of unstated assumptions that prejudice our interpretation of data, arriving at a decision based on what we want to do rather than what we should do. If our action is successful, it becomes a reference point for future decisions – a good luck charm that we refer to when making other decisions. (I got that right, so maybe I know what I’m doing.)   If we are not successful, we curse our luck and try something else because we know that eventually we’ll be able to solve the problem. (This is try-and-try-again thinking, taken to its extreme means that even a monkey on a typewriter will eventually type the complete works of Shakespeare – if given enough chances.)

Even after taking a course in critical thinking – or in my case teaching it many times — we still shoot from the hip; go with our gut. We can tell just by looking at someone whether they have what it takes to be a good hire, a good investment, a good friend.

We are all like Harvard’s most famous MBA, George W. Bush, deciders-in-chief, who go with our gut feelings. This makes us not very good at it being deciders, though it’s what we do so often. (As every marketer knows, we buy on emotion and justify with logic.) Despite being endowed with a large collection of grey matter encased in a hard bucket between our ears, we don’t use it much. We are capable of brilliant insight and reasoning, but too often we fake it because, well, thinking is hard work and too often results in answers that are inconvenient at best and unwelcome at worst.

So a course in critical thinking can be empowering, providing us with tools that can be applied to sort out the relevant from the irrelevant, and define alternative solutions, while thinking broadly enough to ensure that nothing is overlooked.  The logic tree is but one of these tools and it can be useful when practiced often.  But a tool is only as good as the person wielding it.  A golf club in the hands of Tiger Woods is an extraordinarily precise, yet powerful instrument.  In my hands it is a metal stick weighted on one end.  The same goes for the tools of critical thinking. Practice them often; develop the skills for using them, and we have powerful tools. Use them once in a while and they are obtuse exercises that waste time.

So there you have it, deciders.  We need to think better more often.  That’s my gut feeling.

Mentor Who Made a Corporation Less Crazy

Words: 584

My mentor, Bill Blankenship, died last week.  When I first heard, I knew that I couldn’t let it ruin my day – it would have bothered him to know that someone had a bad day because of him.

BillB.  That was his email handle at IBM, where he long worked the oars in the slave galley of corporate communications.  He was a good trooper as far as work went.  Wore a suit.  Showed up on time.  Made deadline on countless corporate reports, speeches and announcements.  But a lot of people do that.  What I really liked about him was that he tried to be good to everyone he encountered, including the first floor receptionist, whom he greeted every time he walked by, and the cleaning woman whom he met almost as often working late at night.  Another person could have easily excused themselves from being polite every time to these people, but not Bill.  I also admired that even though he worked at IBM for decades, he somehow retained a subversive sense of humor about the world and his place in it.  I wonder if he’d come across “The Adventures of Huckleberry Finn” in early adolescence and decided that this stuff about growing up had gone far enough and he wanted no more of it.

He was a bestselling author, too.  I liked his mystery novel,  “Time of the Wolf,” in particular, but his best stories were the ones he told in person.  On a cold day, he might recall his time in the U.S. Army in Kansas, where he was often told to go “sweep the spade,” the 1st Infantry Division’s insignia laid out in stones on a high, wind-blown hill; or the frequent “free beer nights” on the base, when the hung-over casualties were collected on large trucks, taken to a gymnasium, and put in dozens of rows….

When he was young, his family moved from Chicago to Los Angeles, stopping temporarily at various places — the semi-nomadic life of the working poor – until they came to a Santa Monica motel near a pier.  He could hear a jazz band playing in the distance, mixing with the sounds of the ocean, and thought he had come to a wonderful place.

In time, Los Angeles did seem like a place where wonderful things could happen.  He worked his way through USC, had a job all lined up after graduation, and then was drafted, giving him two years worth of stories.

After the Army,  he joined IBM and near the end of his career was sent to Tokyo, where he mentored me in executive communications.  After he retired to the U.S., he continued to advise me in weekly calls.  Often our conversations concerned his youngest grandson who seemed to have inherited his sense of misbehavior.

One of the first things he told me when I came to IBM was, “This corporation is crazy.  Well, actually, all corporations are crazy.  This one is just crazier than others.”  He made it his duty to instill some sanity into the corporation.  Speechwriting, he felt, was one way of doing this, “It’s your job to show that the executive is intelligent, that he knows what he’s doing.  You also try to make him likable – even if he isn’t.  A lot of them aren’t.”  He always tried to help the corporation become a little better, a little less crazy, a little more likable, for the sake of its employees and customers.  And for me, he did just that.

Questions, QuestionsFacebook: Checking Under the Hoodie

Words: 1,678

On the day of its monster IPO, I review questions central to Facebook: CEO, business model and strategy. (Full disclosure: I am a fan, though a skeptical one.)

Zuck as CEO

After Mark Zuckerberg’s appearance last week in front of investment analysts in New York, you’d think that the largest IPO in U.S.history hinged on the acceptability of  his attire, a hoodie sweatshirt. This was, to put it mildly, stupid. The main question about Mr. Zuckerberg is not his hoodie, but what’s under it – his mind and its ability to manage a large corporation, one that he wields considerable control over.

Zuck is not the first young entrepreneur to run a major company.  Silicon Valley turns these out on a regular basis.  Yahoo!’s Jerry Yang was 28 at its IPO in 1996.  The Great Steve Jobs was in his twenties when Apple raised its middle finger toward IBM in the 80s.  Google’s co-founders, Larry Page and Sergey Brin, were 31 and 30 respectively at its IPO.  But the road to greatness is never smooth.  Jobs, famously, was shown the door in 1985, but eventually returned, a wiser man, years later.  Yahoo! had some success, but also a lot of  trouble and continues to struggle.  Google’s life has been relatively calm, making its IPO in 2004 under Eric Schmidt, who is almost 20 years older than the founders.  Schmidt headed the company for 10 years before stepping aside for Page in 2010.

Much has been made about Facebook’s board of directors and Sheryl K. Sandberg, the 42-year-old COO, a former Google executive.  Zuckerberg’s debut in New York may have not have been impressive, but Facebook can still insist that Zuck is guided by a blue-chip team.  Coverage over the weekend pounded away at this, which, if nothing else, proves that Facebook has some great media relations support.  The New York Times ran a long profile that implied that Zuckerberg had the talent and vision to lead, and that he is willing to listen, seeking advice from Bill Gates and Steve Jobs.  The story also walked through a gallery of Who’s Who of Silicon Valley, Peter Thiel, Marc Andreessen, Sean Parker – all senior, experienced hands – who are advising Zuckerberg.  And, of course, there’s Sandberg, who did much of the talking during the road show.

Some of the headlines elsewhere were even more supportive — ZDNET: “Apple co-founder Steve Wozniak: Me + Steve Jobs = Zuckerberg.”   The story’s author, Emil Protalinski, disagrees with this in the subhead — Zuck has vision, but is no longer the technical force behind the company.  Still, Facebook had to be pleased with the headline, particularly as it began to make the rounds on Twitter.

What should we think then?  First, remember that nobody is ever as good, or ever as bad as their press coverage.  Heroes seem to always have a skeleton or two hidden away and serial killers always pay their rent on time and say hello to their neighbors.  Zuckerberg isn’t the Second Coming of Steve Jobs.  (In his twenties Steve Jobs wasn’t even The Steve Jobs.)  Second, a player is only as good as his team.  Just ask LeBron.   As the New York Times story attests, he has a team – a great one.  But does he listen to it? Up to now, he has shown that he doesn’t have to — stories abound that he made the Instagram purchase without consulting the board.  Many of these stories are told to show that he has the vision and will to succeed.  Still, it’s reasonable assume that some board members might have questioned the wisdom of buying an app that has no business plan and hasn’t made any money for a $1B.

My point is not to argue whether buying Instagram was a good decision, but that Zuck didn’t consult his board.  He took action and got sign off later.  The deal was significant – even for a company that is now valued at more than $100B.   This doesn’t bode well for Facebook as a company.  It is one thing to run a private company as if you are Louis  XIV (l’entreprise, c’est moi), but quite another if it is publicly held.

Conclusion: Analysts should be concerned whether Zuck will listen to his advisers.  Right now, I’d say he doesn’t have to and isn’t inclined to.

Relevance vs. Dominance

While there is considerable room for debate, I’m inclined to think that Facebook will be relevant, but not dominate, in the advertising market and the expectation of dominance is what is driving the IPO valuation to $100B and beyond.  We will have to wait a while to see how Facebook’s business model works out, or whether it can find a new way to raise revenue.  Right now it relies heavily on display advertising and that just doesn’t seem good enough.

Supporters say that it has a billion users and is continuing to grow.  But digital audiences have a way of wondering away from the crowd – Compuserv and AOL had huge (for their time) user bases and you could argue that these two companies serve as a good as any for analogy of MySpace and Facebook.  Yahoo! tried to maintain its dominant size by collecting companies and websites, increasing its offerings.  Initially that seemed to work, but eventually it users and employees became confused and exhausted.  It is still relevant, but it is not dominant.

Facebook has room to grow, but how much isn’t clear.  Budgets are flowing its way and that can be expected to continue for the next year or two.   GM’s ad budget, however, is flowing away from it and other advertisers may follow.  Many are still trying to get a handle on Facebook – how to use it and how incorporate it into the marcom mix.   There is growing concern that display ads just don’t work on Facebook and that’s where more than 70 percent of its revenue comes from.  Sure, Google can be upended, but right now ads work when people are searching, not when they’re socializing on Facebook.

Even if Facebook does capture significant share of advertising dollars, it appears that the $100B valuation is at the high end of optimism.  Shawn Tully at Fortune argues that it would have to grow to $61B in annual ad revenue, from its current $3B, to justify as an investment at this valuation: “So Facebook would need to go from a glamour name to capturing something like 8% of all of the world’s ad market in 12 years, grabbing business from the likes of Google and News Corp.  Can it happen? Sure.  But nothing spoils a Wall Street party like a sermon on the math.”

Apple has already shown us over the last 10 years that nothing is impossible.  But new kids come out of nowhere all the time to undermine the status quo.  (Just ask Myspace. ) These days its Pinterest, which has moved into No. 3 in social media views and may drive purchase decisions better than Facebook .

Conclusion: Facebook’s primary source of revenue  still hasn’t won over the industry. Facebook really needs be more persuasive on this or find another way to make money.  Even if it does, it will be a challenge to justify the huge IPO.

Toward Complexity

Remember how Facebook began and how it evolved? Thefacebook, as it was called then, was initially a platform for hooking up — a way for students to check out a classmate to see if they were available.  The most important aspects of an account then were “interested in” (as is meeting men, meeting women) and relationship status.  Since then, Facebook has evolved to focus on the feed and photos, which is great, but it has also continually acquired apps as it has grown, making its interface ever more complex.  Yahoo! started off as a index of the Internet and formed into a site that tries to do everything, none of it really well.  Google, yes, has added a lot to its offering, but it still has a streamlined interface and it knows it does one thing well: search.

Facebook has tried hard to retain simplicity, for example, borrowing the group concept from Google+ and sorting the news feeds (Top Stories vs. Most Recent), but it keeps banging up against the Dunbar’s number,  which says most people can have only about 50 close friends and meaningful relationships with a 150.  What this means for Facebook users is that the more connected you are beyond 150, the less engaged you are.  More connections means viewing more photos of the lunches and cats of people you vaguely know.  Less personal relevance to the user makes the news feed less interesting.  Less interesting means less engagement (and updating).

Hence, Facebook’s efforts to break your connections into groups and sort your newsfeed.  Your post now has a 20 percent chance of being seen by your friends, which leads us back to less engagement.  Dunbar’s number indicates that networks are less beneficial after they expand beyond a certain size.

Sure users can go int0 Facebook and set up groups, or let Facebook do it for them, but a number of  platforms are already offering immediate and simple solutions:  Limited network social platforms, or as I call them, unsocial media that intentionally limit your connections and protect your privacy or, at least, limit public exposure of private information.  These include Path – which limits users to 150 connections.  There are other platforms, too, that appear unrelated at first, but that may steal users’ time, such as Line, sort of an instant Twitter list made from and limited to your contacts.

Lastly, privacy doubts will continue to haunt Facebook.  In many ways, this may be its weakest point.  Facebook’s ubiquity means that it is used more than it is trusted; the social networking incarnation of Windows.

Conclusion:  The strategy maintaining size by adding offerings is similar to Yahoo’s failed strategy of being “everything to everyone” in the late 90s.  Complexity kills.  This, combined with a human inclination (if Dunbar is right) toward platforms offering immediate limited networks will continue to challenge Facebook.  The company, no doubt will survive, it may even prosper, but what about the small investors who bought into the IPO?

Racing Toward a Distant Horizon

Ever faster.

494 Words

On a winter morning Andy and I went to his sports club, Uki Uki, which offers a variety of programs for children.  This has been our typical Sunday since he was two.  There was snow that day and so we played soccer indoors.  His team managed to win one game out of many and my adult team lost them all.  I did, however, avoid a face-plant on the hardwood court, a private victory.  I was moving with unaccustomed speed and caught a toe on the floor.  I became airborne at an angle that guaranteed my head would arrive first, but tucked into a shoulder roll and came up standing – a desperate act executed with surprising agility.  After soccer, we moved on to his swimming lesson, which always makes things better. Lose five games; go swim.

Much later in the day, when he had settled into bed to listen to a story, I remembered that this was his last day as a six-year-old.  This last year had passed with particular speed.  He’d entered elementary school and much of his schedule was already decided.  When he was in daycare he had time, but now the distance between our meetings was longer and it exaggerated his rapid growth.  Pants that were too long one day were above his ankles the next.  He seemed to gain kilos overnight.  Good that we still had his sports club on Sundays.

“Tomorrow you’ll be seven.”

He nodded his head.  He always knew when his birthday would arrive, anticipating each, as he looked ahead to adulthood .  When he turned four he said, “Soon I’ll be able to drive a car.”  I laughed then, but now thought he was right — soon he would be driving.

“We had kind of a rough day playing soccer today” I said. “Did you see me fall?”

He nodded, “Kakuii, daddy, Ultraman mittai.” (You looked cool, like Ultraman.)

I picked up a book and began reading one of  his favorite stories, Dr. Seuss’s “The Big Brag.”  He stopped me and asked about the meaning of “brag” and I used the word “ibatteru” to explain.

“Do you ever do that — brag?”

He shook his head, “Not much, how about you?”

“Often,” I said.

“Honto?”

“Yes, I brag about you.   Andy can play soccer.  Andy can swim.  Andy can ice skate.  Andy can rock climb….It’s OK, isn’t it?  That I’m your biggest fan?”

He nodded yes.

We went back to reading the story and soon he was asleep.  In the morning, he’d be seven and one year closer to driving, but he was already racing toward a distant horizon, somewhere in the future.  I had to recognize the inevitable, that there’d be a time when I was no longer around and our paths would not cross again.  Still, if he had a child as good as mine, one that kept him company and held his hand on occasion, then I knew he would be happy wherever he went.