Creative, constructive, corrective

A year and a half ago, Manchester United played Real Madrid in the quarter finals of the prestigious European Champions League. In a surprise decision a few minutes into the second half, one of United’s best players that day was sent off. It felt like injustice and was very unfortunate as United were leading 1-0 and looked set to go through.

However, legendary manager Sir Alex Ferguson was visibly livid and frustrated. And, it was about 10 or so minutes before he responded with a substitution. The substitution, however, came a few minutes too late. In that time, Real Madrid had scored twice and the game ended at 2-1. And the supporters were left with a big “what if.” What if Sir Alex Ferguson had not lost his temper? Would United have gone through?

Unfortunate events and setback happen. There’s no getting around them. As the football story indicates, they happen at the biggest of stages. There’s no point succumbing to anger and frustration because they get in the way of a creative, constructive and corrective response.

Our setbacks don’t define us. Our responses do.

GTA Advanced’s surprise bankruptcy – MBA Learnings

If you’ve been following the tech news, you’ve probably heard of the recent bankruptcy of Apple’s Sapphire glass partner – GTA Advanced. This was the quote from Apple following the announcement –

“We are focused on preserving jobs in Arizona following GT’s surprising decision and we will continue to work with state and local officials as we consider our next steps.” 

The quotes in news headlines in the following morning used words like “unexpected,” “surprised,” etc., etc. But, as we did in our accounting class, one look at the SEC filing of the company at the end of June says otherwise –

GTAT Cash Flow Statement

 

The cash flow statement above shows that it had lost $165M cash over the quarter and had only $330M cash left. Now, this can’t be looked at in isolation of course. If they were due a massive repayment by a customer, then we would have to reconsider our conclusions. However, they only had $14M of accounts receivable due. They were just stuck in a very expensive business without the necessary scale. Given the rapid rate at which they were losing money, one could predict that they wouldn’t last longer than 2 quarters. And, they didn’t. You could also argue that they could have raised a large amount of money via external financing. But, as you might imagine, the list of financiers who would like to get in at this stage was likely going to be very small.

Hence, it is actually very surprising that Apple and the media were “surprised” at the bankruptcy.

My learning was that a working knowledge of accounting goes a long way. Irrespective of whether or not you foresee yourself in a role that involves finance, the ability to read financial statements can help a lot. For example, most large corporations provide stock and stock options to employees. How many of these employees actually read their own company’s financial statements?

Perhaps reading financial statements of organizations whose fate influences us (e.g. a key customer or supplier or a target employer) may help prevent a bad surprise or two. That could end up saving us a lot of mental and financial pain.

Sweating in peacetime

We go through high pressure periods and low pressure periods. High pressure periods are those times when we feel our backs are to the wall – a critical deadline, an examination, or a product launch. And, then, we inevitably face the low pressure period when things get easy again. We can afford to breathe easier, slack off a bit, and catch up on the finer things in life.

As we take on bigger and bigger responsibility, however, this approach results in large spikes of activity that are unsustainable. When you are the leader of the massive product launch team, the pressure is high. But, you can’t just throw your life away during the pre-launch period as you also have a family to look after.

So, how do you prevent these spikes in activity? By sweating in peacetime.

It is natural that you exert a lot of pressure on yourself when the going gets tough. But, it doesn’t make much of a difference because everybody does that. It is by exerting pressure on yourself when things are easy that you make things easy for yourself. It not only enables you to ease the pressure on yourself when the going gets tough. It also allows you to get through such times without any long term damage to your health or relationships.

Life is best lived like a good ECG. There will always be fluctuation around the middle. We just want to avoid the big spikes or troughs. And, you know how we do that – by sweating in peacetime. So, eat, sleep, and exercise, while you are in good health. Invest in your relationships when things are good. And, work hard to smooth out the impending spikes in activity at work.

The more we sweat in peacetime, the less we bleed in war.

The sumo state of mind

The average sumo fight lasts around 10 seconds. The preparatory rituals before the fight take much much longer than the fight itself.

A fight is a culmination of intense preparation over the 3 months between the 4 major tournaments and rigorous practice for years before they qualified to fight in the highest division.

But, all that ceases to matter when they step onto the ring. It all comes down to the quality of their effort in those 10 seconds. If a top grade sumo wrestler can keep up his intensity over the course of a tournament day and bring his highest level of performance in the 20 or 30 seconds during which he fights, he’ll emerge a winner. If not, he risks losing his place in the division. And, hence, one of the biggest objectives of the practice regime of a sumo wrestler is to find ways to sustain that intensity. Traditionally, this means living a life of intense discipline while they train.

We often measure our productivity by the duration of our effort. Perhaps we should channel the sumo state of mind and try intensity as a measure of our productivity instead.

Staples’ caution and optimism – The 200 words project

Here’s this week’s 200 word idea from Decisive by Chip Heath and Dan Heath..

Researchers studied companies and their moves in 3 big recessions – 1980-1982, 1990-91, 2000-02. Their moves were broadly focused either on “prevention” (e.g. job cuts) or “promotion” (e.g. investment in new products). They found that neither approach, when used too much, was successful. While prevention focused companies were pessimistic, promotion focused companies were regularly naive and steeped in denial of the gravity of the crisis.

The most successful companies were “multi-trackers” or companies that combined both approaches. For example, in 2000, Staples closed under-performing stores but hired 10% new employees to roll out a new high end service for customers. Office Depot, on the other hand, just cut 6% of workforce and made no comparable investments. 3 years later, Staples was 20% more profitable. It had cut out costs to become efficient but still invested.

AND, not OR, turned out to be good corporate strategy. When faced with cutting 5% off a budget, better to consider cutting 8% in unnecessary areas and spending 3% on future investments.

This applies just as well to our lives, of course – we make our best decisions when we combine caution with optimism.

Optimism CautionSource and thanks to: www.EBSketchin.com

‘A study by Kathy Eisenhardt at Stanford University found that the Silicon Valley firms that were the quickest to respond to strategic changes — and respond with a strategy that addressed the changes in their industry — were firms where top leaders considered multiple alternatives at the same time.’ | Chip Heath and Dan Heath 

Signaling and that glass ball

Our lizard brain works like Gmail’s priority inbox. It looks at our reactions to stimuli over time and then categorizes some as important and others as junk. For example, it learns quickly that a call from our scary boss ought to send our pulse shooting up and ensure maximum alertness. It does a magnificent job with this. The only hitch is that it depends on signals from our thinking mind. And, our thinking mind is often dominated by the short term emotional half that finds it hard to differentiate between what is urgent and what is important.

So, the first time we cancel our basketball game for a meeting, it automatically gives meetings higher weight to meetings over health. I’m sure you recognize these signals – coffee over sleep, a drink to kill frustration instead of a work out, food that kills us (a.k.a comfort food) over healthy food and good conversation, etc.

Juggling health is a bit like juggling a glass ball as we walk up a hill. And, we walk up the hill every day as we get older. When we’re kids, dropping the glass ball means we just need to bend down, pick it up, fix it and start climbing up again to regain lost ground. It is both easier to fix it with a bit of super glue and easy to make up lost ground as we aren’t too high up the hill. It also helps that we’re pretty fit.

As we grow older, however, dropping the glass ball means higher damage as it rolls further down than it used to. This acts as a multiplier as it gets correspondingly harder to make up lost ground because we also get out of breath quicker.

So, watch that glass ball. And, watch those signals… for as we live as our days, so we decide our lives.

No, it’s not always a courage problem

Some panels and articles on entrepreneurship make it sound like the only difference between you and your potential million dollar start-up is courage. Panels that encourage you to find a career based on your “passion” tend to do the same.

No, it is not always a courage problem. Sure, it can be at times. But, it is definitely not the case most of the time.

There are many factors that contribute to the early success of a company – the founder’s product skills, product-market fit, and the founder’s ability to market the product and make the sale. Courage just helps the founder get started. The career conundrum is more nuanced. But, the fact remains that it has to be grounded in practicality. You might have a passion for photographing Kangaroos but that doesn’t immediately make it viable. And, a passion for photographing Kangaroos doesn’t guarantee skill. Additionally, being a photographer is very different from running a photography company just like teaching is different from running a school. They require different skill sets and it is not always easy to divine your potential skill in something you haven’t tried.

So, if you don’t feel ready, that’s okay. If you are keen on changing things in your life, I have seen three principles that seem to contribute to successful change –

1. If you are looking to change location, function, and industry, look to change 1 or 2 things at a time. I know of folks who’ve managed to change all three but I wouldn’t bank on it. The best way to do so is to change 1 or 2 things at a time. For example, a friend of mine who works in a Finance role in a certain industry found it easiest to first move into Marketing within the same industry. The next step will be to switch into the industry of his choice and perhaps location will follow. The other way to look for a complete switch is to go to school in the location of your choice. That way, you’re left with needing to switch function and industry.

2. Work on your million dollar idea in the spare time. Most great companies start out as hobbyist projects. Crucially, this enables you to test if you are onto something before jumping ship. Test your future lifestyle before committing to it. As Cal Newport puts it, just because you’ve committed to living a certain lifestyle doesn’t mean others are committed to supporting you for it.

3. It is okay to not have found your passion. No big deal. Just get good. Good things follow.

Read the question

Since I’m back to writing exams as a graduate student, I’ve found myself re-acquainted to an old foe – the habit of making a mistake because of not reading the question completely. As a kid, this used to show in the number of “silly” mistakes I used to make. Copying a number wrong here and completely missing an important part of the question there were classic examples. Somehow, calling them “silly” seemed to soften the blow.

With time and reflection comes maturity (or at least that’s what I hope :-)), and I think I’ve learnt to slow down a lot more. But, I can still sense the old instinct and I’ve certainly caught myself not doing this as well as I’d like over the past few weeks.

The way I see it, reading the question is not just an examination thing. It is a general sign that I need to slow down a bit as I understand a problem. It applies just as well to listening to people completely and not jumping to conclusions mid-sentence. It also means holding that bias for action back for a bit so I can give the plan of action a bit of thought. And it means ensuring adequate reflection between iterations.

Often, to go fast, we first need to go slow.

Encouraging the devil’s advocate – MBA Learnings

In our pre-term class on Leadership in Organizations, we spent a few hours on personal and organizational decision making. A recommended tactic was to assign a team member to play “devil’s advocate” on all important decisions. This move is designed to eliminate confirmation bias and “yes-and-yes” decisions.

As we spent a lot of time discussing the importance of a devil’s advocate, I thought I’d share the story of the how the devil’s advocate came to be – with due thanks to Decisive by Messrs Chip and Dan Heath.

For centuries, the Catholic Church made use of a “devil’s advocate” in canonization decisions (i.e., in deciding who would be named a saint). The devil’s advocate was known inside the church as the promotor fidei—the “promoter of the faith”— and his role was to build a case against sainthood and, thus, force the decision maker to consider 2 points of view.

Pope John Paul II eliminated the office in 1983, ending 400 years of tradition. Since then, tellingly, saints have been canonized at a rate about 20 times faster than in the early part of the twentieth century.

So, if you have team members and friends who frequently play devil’s advocate, encourage them. And, I hope you will consider assigning a person or group of people to play devil’s advocate on all important decisions.

This is the stuff I’m struggling with

I had a comment from a friend on yesterday’s post on playing the long game. He said –

“This post pretty much summarises how quite a bit of my time is spent. Obsessing over results and result or resume driven growth is something I find myself guilty of quite often. The frustrations that follow should be expected but feel new every – time. I guess going long on these things is quite difficult given how caught up we get in daily pursuits and expectations :) Nevertheless, will try it out.”

My response was – “Welcome to the struggle my friend. It is a worthy fight!”

My biggest motivation behind writing here every day is that the process of doing so clarifies these ideas in my head and helps me learn and get better. I have worked very hard over the past six and a half years to be worthy of the ideas and ideals that this blog stands for. And, most things I write here are stuff I’m struggling with.

As you can probably tell, the biggest learning focus in my life at the moment is to focus entirely on the process and not worry about results. And, if you’ve been following this blog regularly, you’ve seen many posts that say as much. I can’t explain how hard this has been for me over the years. I used to beat myself up when I made mistakes and ended up losing twice at the end of it. I’ve learnt that that is useless. Every minute spent on outcomes is a minute taken away from the process and the next result. Success is best measured by a great journey. And, great journeys generally take us to great places (and, if they don’t, the journey is where spent our time anyway!). And, I think I am much better at being truly forward looking now than I was a couple of years ago. There is still a long way to go though.

There isn’t any easy way out. The way forward is painful. But, the journey is one that involves growth, learning, and wisdom. So, if these ideas resonate with you and if you feel that feeling of frustration from time to time, all I will say is – welcome to the club.

I understand your frustration and pain. But, if it makes you feel any better, this is how we get made..