May The Force Be In You

Who does not like Star Wars? Nobody. It is a great fairy tale. And, we all know the quote, “May the force be with you.” It is a memorable line. And, it is kind of sexy. It is akin to wishing someone good luck. We do it all the time.

Maybe I should have titled this post “On luck” because I think it is an interesting topic. I heard it said one time that we should pray for miracles but work for results. I like this idea. It is rather paradoxical. The idea that miracles happen is so promising. It is so hopeful. It is something to wish for. But, counting on miracles is not a good strategy. A better strategy is to work your butt off. If luck comes in to play, all the better.

As you know, George Lucas is the person who wrote Star Wars. And, as George knew, he was not talking about reality. Lucas was not trying to tie present experience to intergalactic space. His intent was to “set standards.” Lucas knew he was dealing in mythology. For this reason, the Star Wars series is great entertainment. However, when it comes to life, the famous force quote needs to change one word. When it comes to real life we should say, “May the force be in you.”

The force is not something external to you. It is not something that is either with you or against you. The force is always within you. It is within all of us. We create force. I guess that brings me to another quote that is a little weird. At one point Yoda says, “Do or do not, there is no try.” I understand the point but it is kind of bologna.

Let's say you are teaching your child to ride a bike. Would you say, there is no try? Of course not. Like anything in life you have to try, and keep trying, until you get it. And that energy to keep trying comes from within. It is a force that we have to create. The force is within you.

The fact of the matter is, a lot of times we just have to force ourselves to do stuff. This relates to the idea of “emotional reasoning.” Emotional reasoning is a, somewhat, nerdy concept that I wrote about in this post (Don't Trust Yourself) It is where we do what our emotions, or feelings, tell us to do. I guess another name for it would be hedonism.

The idea of using the force, to combat emotional reasoning, is based upon the law of inertia. As we all know, inertia is Newton's first law of motion. It is that one that says objects in motion tend to stay in motion, and objects at rest tend to stay at rest. I way I think of it always seems to be about pushing a car that has run out of gas. But, the law of inertia applies to all facets of life.

When it comes to work, and creativity, it is not a good idea to wait around for the muse to kiss you. Rather you want to force yourself into action. A big key is to inject the necessary energy to overcome inertia. Pablo Picasso famously said, “Inspiration exists, but it has to find you working.” If your (metaphorical) car has run out of gas, the hardest part is getting it moving forward. Once the car is rolling it gets a lot easier. Let me give you a personal example.

I really did not want to write this blog post. I did not know what I was going to write about. Plus, being that it is Memorial Day weekend, I have a lot of other things I would rather be doing. The solution? Force. I just forced myself to sit down and start typing. And, sure enough, as I got into motion, the ideas started to flow.

Now, I am certain this post is not the best in the world. Like I said, the smell of barbeque makes it difficult to focus. So, please forgive me if this blog is all over the place. But, I had to do it. I am always trying to remind myself that my goals are stronger than my mood. I remind myself to distrust what it is I feel like doing. I guess that is how I selected this topic. I do not want to be typing these words right now. But, I do want to stick to my commitment of blogging new material once a week.

This is actually the first post where I have written about my current feelings. I did not think that was going to happen when I first sat down. But, that is where the muse led me. And, I did not what to be a hypocrite. How could I preach against emotional reasoning and not have a post ready for this week? I couldn't. And, I remembered the subtitle to this blog. It does not say, “Earth-shatteringly poetic prose posted every Monday.” It just says “I post something new every Monday.” Sorry Yoda, but, today, I tried my best.

All in all, we need to force ourselves into doing thing much more often than we will feel. If you're not forcing yourself to do things you do not feel like doing, then you are not reaching your full potential. And, it is my belief that work is the avenue by which humans can experience the joy of reaching their fullest potential. This is the take away from my very favorite book titled Flow. If you haven't read Flow, please do so. It might be the most important, and profound, book ever. More to come on that subject.

At any rate. May the force be in you!

Time for a burger!

The Three Types of Entrepreneurs

Entrepreneurship is a big part of what made America great. As we know, the whole world is currently in an economic rut. Being that I'm an American, I look at the issue from the perspective of a Yankee. Going forward, the success of America will largely depend on the success of the entrepreneur.

This post will mostly be based on the work of economist William Baumol. I know economics has been called the dismal science. But, I think Baumol has something interesting to say about entrepreneurs. However, before I get to Baumol I want to mention something from Peter Drucker.

Drucker suggested that we might be in the age of the entrepreneur. He wrote, “A hundred years ago the worldwide panic of 1873 terminated the century of laissez-faire that had begun with the publication of Adam Smith's Wealth of Nations in 1776. In the panic of 1873 the modern welfare state was born. A hundred years later it has run its course, almost everyone now knows. It may survive despite the demographic challenges of an aging population and a shrinking birthrate. But it will survive only if the entrepreneurial economy succeeds in greatly raising productivites.”

That's what really matters. The increasing of productivity. But, productivity might not mean what you think. Productivity doesn't just mean getting more things done in less time. While that is one element of productivity, it is not the only piece. The entire economy is about the allocation of resources. If you can't increase the quantity of a resource, increasing productivity means you have to increase its yield. To sum it up, increasing productivity means getting more out of our resources be they time, money, land, energy, or whatever.

Now to Baumol. Baumol holds professorships at both NYU and Princeton. The focus of his research is on entrepreneurship and innovation. Let me ask you this. What is an entrepreneur? It's a pretty good question. And, it's kind of difficult to answer.

Professor Baumol writes, “If entrepreneurs are defined, simply, to be persons who are ingenious and creative in finding ways that add to their own wealth, power, and prestige, then it is to be expected that not all of them will be overly concerned with whether an activity that achieves these goals adds much or little to the social product or, for that matter, even whether it is an actual impediment to production.”

Building off of this definition Baumol suggests that there are three types of entrepreneurial activity: productive, unproductive, and destructive. Productive entrepreneurship is about innovation. Unproductive entrepreneurship has to do with something called “rent-seeking.” And, destructive entrepreneurship is things like organized crime.

I think we all have an idea what organized crime is. It has do to with things like those guys with pinky rings. It's a destructive form of entrepreneurial activity and I won't spend any time on it. Let's talk about innovation, a productive form of entrepreneurship.

Stated simply, innovation is about the creation of new value and new wealth. It's not invention or scientific discovery. It's not creativity. Rather, it is the commercialization of creativity. It's about taking new and creative ideas and putting them in a form that consumers find valuable and are willing to pay for.

Let's run through a couple of examples. These days it seems like all eyes are focused on the Silicon Valley. I was going to use Apple computers as an example but, instead, let's talk about the namesake. The Silicon Valley is the home of the personal computing industry. As you probably know, it got its name from the fact that silicon is the material used to create microprocessors. But, silicon is nothing more than a chemical element that we find in the ground. Here's a picture of silicon:

Nobody wants that crap! The innovation, at play, was taking silicon and turning it into the parts of a computer. That is what people value. That is what people want. It took people like Bob Noyce, and Jack Kilby, to take silicon and make an integrated circuit. What they did was increase the yield of a resource. That black silicon doesn't do anything. But, a computer does a helluva lot!

As it turns out, most innovation is not high-tech. I'll just do one example. I'm certain you have heard of Sam Walton. And, unless you're one of those snobs that won't go below Target, chances are you have been to a Walmart. Walmart is the largest retail operation in the world. What Walmart did, to become so successful, is the very definition of low-tech.

The innovation that made Walmart so huge is ridiculously simple. The company was build on the premise of low margins and high volume. What the discount retailers, like Walton, discovered was that by selling more goods at a lower price they could make more money than if they sold fewer goods at a higher price. Today we take this for granted. But, at the time, it was pure innovation. The customer wins and the company wins. Walmart is a big-time, productivity increasing innovation. And, it's based on an extremely low-tech idea.

Innovation is a productive entrepreneurial activity. Now let's talk about unproductive entrepreneurship. The example that Baumol gives is something called rent-seeking. There's a good chance you aren't familiar with that term. Please let me explain, because it's very important. If innovation is about adding new pieces to the puzzle, rent-seeking is about shuffling the existing pieces around. To put it differently, rent-seeking is about getting a bigger piece of the pie for yourself. Innovation is about making the pie larger for everyone.

Let's do some examples. One example of rent-seeking, which relates directly to the name, is landholding. As we know, the 19^th Century was an era of westward expansion in America. People migrated towards the Pacific Ocean as quickly as they could. Settlers laid claim to the land they occupied. If you wanted to use “their land” you would have to pay a fee. You would have to pay rent. These land-grabbers were entrepreneurs but they were unproductive. They didn't contribute anything to society. It was an “I got mine!” mentality.

Another example is usury. The dictionary defines usury as, “The practice of lending money and requiring the borrower to pay a high amount of interest.” If you've been following this article, you know that usury is a form of rent-seeking. An example of usury are payday lenders. People who start a payday lending business are entrepreneurs. But, their entrepreneurial activity is unproductive in that it contributes nothing to society. Actually, usury is also used by organized crime.

I know, I know the proprietors of these establishments would argue they are providing a valuable service. But, the fact of the matter is they are taking advantage of people's ignorance. Allow me to demonstrate. Without looking below, tell me the mathematical formula for compounded interest. I doubt you'll be able to, very few people can. I too had to look it up. (I have included the formula at the bottom of this post.)

A third example of rent-seeking would be "greenmail." As you might know, greenmail has to do with hostile corporate takeovers. This is where a person (or company) buys shares of a targeted company's stock. The buyer then threatens to take to the company over. If the target company doesn't want to be taken over they have to buy back the shares at a substantial premium. Greenmail results in a profit but it certainly is not productive.

All in all, I am not trying to place judgment on people. What I am saying is that the future of America resides with the entrepreneur. But, not any entrepreneur. The key is that our entrepreneurial activities be productive. Rent-seeking isn't necessarily illegal. But it isn't productive either. If we are going to get America back on track we need to increase productivity. We need to innovate.

This is the equation for compounded interest:

Not so easy!

Book Review: The Checklist Manifesto

This post is an overview of the book The Checklist Manifesto by Atul Gawande

Atul Gawande's bio: Dr. Gawande is a surgeon at the Brigham and Women's Hospital in Boston, a staff writer at The New Yorker, and an associate professor at Harvard Medical School. He also leads the World Health Organization's Safe Surgery Saves Lives program.

Key point: The world is becoming increasingly complex and we need tools to cope with that complexity. (One of my favorite paradoxes is that, "It is hard to keep things simple.")

Let's start off with a shocking statistic. Columbia Law Professor James S. Liebman did some research and found that two-thirds of death penalty cases are overturned because of errors. If that number doesn't bother you, I encourage you to imagine if you, or someone you love, were wrongly convicted of a heinous crime. Putting someone to death is a very serious decision. What's more, it can't be reversed. So, it would stand to reason that we do our level best to not make any mistakes in capital cases. And yet it seems that lots of errors are still being made.

Alexander Pope famously said, “To err is human.” The fact is, we humans make lots of mistakes. And, as the world becomes more specialized, and more complex, the chance of making an error goes up. The author of this book is a surgeon. And so a lot of what he talks about comes from the world of medicine. Gawande says, these days surgery is so specialized that they joke about right ear surgeons and left ear surgeons.

Consider these statistics, from the book, “On any given day in the United States alone, ninety thousand people are admitted to intensive car … Critical care has become an increasingly large portion of what hospitals do. Fifty years ago, ICUs barely existed … The average patient required 178 individual actions per day.” With all that complexity and activity lots of mistakes are made. The knowledge exists so that all surgeries are safe. Even still, steps are still missed and mistakes are still made. As it turns our, upwards of 150,000 people die annually after surgery. So the question becomes, what do you do when expertise is not enough?

“On October 30, 1935, at Wright Air Field in Dayton, Ohio, the U.S. Army Corps held a flight competition for airplane manufacturers vying to build the military's next-generation long-range bomber. It wasn't supposed to be much of a competition. In early evaluations, the Boeing Corporation's gleaming aluminum-alloy Model 299 had trounced the designs of Martin and Douglas. Boeing's plane could carry five times as many bombs as the army had requested; it could fly faster than previous bombers and almost twice as far. A Seattle newspaperman who had glimpsed the plane on a test flight over his city called it the “flying fortress,” and the name stuck. The flight “competition,” according to the military historian Phillip Meilinger, was regarded as a mere formality. The army planned to order at least sixty-five of the aircraft.

“A small crowd of army brass and manufacturing executives watched as the Model 299 test plane taxied onto the runway. It was sleek and impressive, with a 103-foot wingspan and four engines jutting out from the wings, rather than the usual two. The plane roared down the tarmac, lifted off smoothly, and climbed sharply to three hundred feet. Then it stalled, turned on one wing, and crashed in a fiery explosion. Two of the five crew members died, including the pilot, Major Ployer P. Hill.

“An investigation revealed that nothing mechanical had gone wrong. The crash had been due to “pilot error,” the report said. Substantially more complex than previous aircraft, the new plane required the pilot to attend to the four engines, each with its own oil-fuel mix, the retractable landing gear, the wing flaps, electric trim tabs that needed adjustment to maintain stability at different airspeeds, and constant-speed propellers whose pitch had to be regulated with hydraulic controls, among other features. While doing all this, Hill had forgotten to release a new locking mechanism on the elevator and rudder controls. The Boeing model was deemed, as a newspaper put it, “too much airplane for one man to fly.” The army air corps declared Douglas's smaller design the winner. Boeing nearly went bankrupt.

“Still, the army purchased a few aircraft from Boeing as test planes, and some insiders remained convinced that the aircraft was flyable. So a group of test pilots got together and considered what to do.

“What they decided not to do was almost as interesting as what they actually did. They did not require Model 299 pilots to undergo longer training. It was hard to imagine having more experience and expertise than Major Hill, who had been the air corps' chief of flight testing. Instead, they came up with an ingeniously simple approach: they created a pilot's checklist. Its mere existence indicated how far aeronautics had advanced. In the early years of flight, getting an aircraft into the air might have been nerve-racking but it was hardly complex. Using a checklist for takeoff wold no more have occurred to a pilot than to a driver backing a car out of a garage. But flying this new plane was too complicated to be left to the memory of any one person, however expert.

“The test pilots made their list simple, brief, and to the point–short enough to fit on an index card, with step-by-step checks for takeoff, flight, landing, and taxiing. It had the kind of stuff that all pilots know to do. They check that the brakes are released, that the instruments are set, that the door and windows are closed, that the elevator controls are unlocked–dumb stuff. You wouldn't think it would make that much difference. But with the checklist in hand, the pilots went on to fly the Model 299 a total of 1.8 million miles without one accident. They army ultimately ordered almost thirteen thousand of the aircraft, which it dubbed the B-17. And, because flying the behemoth was now possible, the army gained a decisive air advantage in the Second World War, enabling its devastating bombing campaign across Nazi Germany.

“Much of our work today has entered its own B-17 phase. Substantial parts of what software designers, financial managers, firefighters, police officers, lawyers, and most certainly clinicians do are now too complex for them to carry out reliably from memory alone. Multiple fields, in other words, have become too much airplane for one person to fly.”

There are two main problems. The first one is the fallibility or human memory and attention. And, the other one is complacency. A lot of the work we do is routine and can get overlooked. If you're confronted with simple and routine problems; you want what engineers call a “forcing function: relatively straightforward solutions that force the necessary behavior–solutions like checklists.”

Peter Pronovost (Johns Hopkins Hospital) created a checklist to try to reduce the rate of central line infections. The central line is the large catheter that is inserted at the top of your chest near your collar bone. “Within the first three months of the project, the central line infection rate in Michigan's ICUs decreased by 66 percent. Most ICUs–including the ones at Sinai-Grace Hospital–cut their quarterly infection rate to zero. Michigan's infection rate fell so low that its average ICU outperformed 90 percent of ICUs nationwide. In the Keystone Initiative's first eighteen months, the hospitals saved an estimated $175 million in costs and more than fifteen hundred lives. The successes have been sustained for several years now–all because of a stupid little checklist.”

“Two professors who study the science of complexity–Brenda Zimmerman of York University and Sholom Glouberman of the University of Toronto–have proposed a distinction among three different kinds of problems in the world: the simple, the complicated, and the complex. Simple problems, they note, are ones like baking a cake from a mix. There is a recipe. Sometimes there are a few basic techniques to learn. But once these are mastered, following the recipes brings a high likelihood of success.

“Complicated problems are the ones like sending a rocket to the moon. They can sometimes be broken down into a series of simpler problems. But there is no straightforward recipe. Success frequently requires multiple people, often multiple teams, and specialized expertise. Unanticipated difficulties are frequent. Timing and coordination become serious concerns.

“Complex problems are ones like raising a child. Once you learn how to send a rocket to the moon, you can repeat the process with other rockets and perfect it. One rocket is like another rocket. But not so with raising a child, the professors point out. Every child is unique. Although raising one child may provide experience, it does not guarantee success with the next child. Expertise is valuable but most certainly not sufficient. Indeed, the next child may require an entirely different approach from the previous one. And this brings up another feature of complex problems: their outcomes remain highly uncertain. Yet we all know that it is possible to raise a child well. It's complex, that's all.”

In trying to understand how to be successful in an increasing complex world, Gawande drew much inspiration from the construction of large buildings. He remembered trying to build a bookcase when he was eleven years old, growing up in Athens, Ohio. His creation was an absolute mess and it gave Atul an appreciation for the difficulties of constructing things. When it comes to building large buildings, “All together, projects today involve some sixteen different trades.” That's quite a complicated task and Gawande makes note that it isn't too different from medicine.

One of the items on the construction checklist was that people take the time to talk to each other. As simple as that may sound. Even simpler, a point on a surgery checklist was that everybody introduce themselves to the members of the team. The idea, in construction, is that “Man may be fallible, but maybe men are less so.” It is the nature of the construction checklist to believe in the wisdom of the group.

A common reaction to risk is to central authority and power. But, that's the exact wrong solution. Gawande writes, “In the face of an extraordinarily complex problem, power needed to be pushed out of the center as far as possible.” Stated differently, command-and-control doesn't work. You want to empower the troops. Atul calls it, “A seemingly contradictory mix of freedom and expectation.” The author gives the example of Hurricane Katrina. The government did a lousy job because they decided to centralize authority and power. Walmart ended up being tremendously helpful because they made the conscious decision to push authority and power out to where the action was happening.

During his research for the book, Gawande visited many locations. Including restaurants. What he found was that cooking recipes are, indeed, checklists. On a busy Friday or Saturday night a restaurant can serve lots and lots of meals. The way the business assures efficiency and consistency is through the effective use of recipes. Gawande writes, “There seemed no field or profession where checklists might not help.”

One area where the problems of complexity is most pronounced is with medicine. According to Gawande, “Worldwide, at least seven million people a year are left disabled and at least one million dead,” after surgery. What's more, “Studies in the United States alone had found that at least half of surgical complications were preventable.” As we know, doctors are very smart people. And yet they still make their share of mistakes. In a lot of ways medicine is like trying to fly the B-17 all by yourself. It may well be too much plane for one man. And so, like aviation, Gawande believed that checklists could be of great benefit to the medical field.

There are two types of aviation checklists; DO-CONFIRM and READ-DO. The names suggest how they work. With do-confirm lists you do what you have been trained to do and then you check to make sure you did all the right things. But, with read-do checklists, you first read the list to refresh your memory about the things you need to do. In constructing a checklist Gawande makes the following observations, “A rule of thumb some use is to keep it to between five and nine items, which is the limit of working memory … An inherent tension exists between brevity and effectiveness … It should fit on one page. It should be free of clutter and unnecessary colors … A checklist has to be tested in the real world … First drafts always fall apart.”

“It is common to misconceive how checklists function in complex lines of work. They are not comprehensive how-to guides, whether for building a skyscraper or getting a plane out of trouble. They are quick and simple tools aimed to buttress the skills of expert professionals. And by remaining swift and usable and resolutely modest, they are saving thousands upon thousands of lives.”

“If someone discovered a new drug that could cut down surgical complications with anything remotely like the effectiveness of the checklist, we would have television ads with minor celebrities extolling its virtues.” But, professionals resist using them. Atul continues,“It somehow feels beneath us to use a checklist, an embarrassment.” But, “Good checklists could become as important for doctors and nurses as good stethoscopes (which, unlike checklists, have not been proved to make a difference in patient care).”

Gawande talks about the guys at Pabrai Investment Funds in Irvine, California. Mohnish Pabrai, and his crew, have decided to use checklists when making their decisions on where to invest. The folks at PIF are value investors in the mold of Warren Buffett. Atul says, “Neuroscientists have that found that the prospect of making money stimulates the same primitive reward circuits in the brain that cocaine does.” The big problem is that the cocaine brain can lead to very bad decisions. So, what did Pabrai do? He created a checklist to counteract the potential problems that arise from the cocaine brain. “Forty-nine times out of fifty, he said, there's nothing to be found.”

Dr. Gawande also talks about the book Who by Geoff Smart. Smart's book is basically a long checklist on the method his company teaches for finding good people for your business. When investors are looking for the right place to put their money, they're much more concerned with who they invest in rather than what. Gawandes explains, “Finding a good idea is apparently not all that hard. Finding an entrepreneur who can execute a good idea is a different matter entirely.” Most new businesses fail and a checklist is a great way to increase your odds of successes.

Speaking of success, remember the story of airplane pilot Chelsey “Sully” Sullenberger? Well, you shouldn't read this book if you like to think of him as some superhuman hero. Turns out that Sully was able to land an passenger airplane on the Hudson River because of the system and checklists the plane had on board. As Sullenberger himself said, the crew's successful landing was do to teamwork and a checklist. It's wasn't the work of ordinary genius and Sully doesn't view himself as a hero.

I will leave you with a few more notes from the book. “The routine can be pointless most of the time … The fear people have about the idea of adherence to protocol is rigidity … What you find, when a checklist is well made, is exactly the opposite. The checklist gets the dumb stuff out of the way, the routines your brain shouldn't have to occupy itself with … We are by nature flawed and inconstant creatures … We are not built for discipline. We are built for novelty and excitement, not careful attention to detail. Discipline is something we have to work at.”

Have you ever heard the advice to fight fire with fire? Of course you have. And, sometimes, it's really good advice. But, sometimes, it's not. Sometimes it's much better to fight fire with water. This book is about fighting fire with water. To combat the ills, and dangers, of complexity Gawande is recommending one of the most simple of solutions–the checklist. Try it, it works.

The Last of the Human Freedoms

Americans love freedom, and rightfully so. Freedom is a very American concept. Today I want to talk a little about freedom but do so from the perspective of an Austrian bloke. The man's name was Viktor Frankl. You may have heard of Dr. Frankl but I still think a short bio is in order.

Viktor was Professor of Neurology and Psychiatry at the University of Vienna Medical School. He also happened to be Jewish. It was the Jewish part which caused him, during World War II, to spend 3 years in various concentration camps, including Theresienstadt, Auschwitz, and Dachau.

In 1946 Frankl wrote a book that eventually became known as Man's Search for Meaning. In the book, Viktor chronicles his experiences living in concentration camps. The reading is profound and tragic. I won't get into the specifics because they are heart-breaking. What I want to discuss are a couple Frankl's findings. However, I do encourage you to read Man's Search for Meaning because it is very interesting to hear about life, under the Nazis, from the perspective of a trained professional.

Viktor eventually founded a school of psychotherapy called Logotherapy. From the book, “Logotherapy focuses on the meaning of human existence as well as on man's search for such a meaning … Man's search for meaning is the primary motivation in his life and not a 'secondary rationalization' of instinctual drives. This meaning is unique and specific in that it must and can be fulfilled by him alone; only then does it achieve a significance which will satisfy his own will to meaning.” Frankl says, “The categorical imperative of logotherapy is, 'Live as if you were living already for the second time and as if you had acted the first time as wrongly as you are about to act now!'”

But the thing I really wanted to draw your attention to is what Frankl called, “The Last of the Human Freedoms.” The last of the human freedoms is the ability to choose one's attitude in any given set of circumstances. Now, mind you, this is coming from a man who was stripped naked, both literally and figuratively, chained and forced into hard labor, and confronted with the very real prospect that he would soon die. Frankl writes, “In the final analysis it became clear that the sort of person the prisoner became was the result of an inner decision, and not the result of camp influences alone.”

This last quote is truly earth-shattering. For me, one of the messages is to live a life of responsibility, no matter what. If these prisoners couldn't blame the concentration camp for their attitude, what excuse could you or I possibly have?