What Happened To That Easily Winnable Trade War? – Ignorance, hypocrisy, incompetence and incoherence do not make “policy”

If you have some issues with your closest and oldest business partners, do you try to discretely discuss the issues with them? Or, do you publically insult them, slap them with unilaterally determined fines, and say, “Now, negotiate with me on my terms”? Further, if you have a track record of multiple bankruptcies, including failing a casino (think on that), stiffing your partners, having difficulties securing bank loans, retaining competent lawyers, etc., then, by definition, you are not a successful businessman. Can someone with such a background make deals on the international stage, without any considerations of, nor desire to learn about, the usual geopolitical morass? Would you trust buying/selling a house with such a person as your realtor? Would you hire such an individual as your CEO? Why would some people believe that Mr. Trump, representing USA, has some kind of master plan of using tariffs to motivate other countries to sell their products here? – or to stop selling their products here?

If anyone thinks that in 21st century we can build a successful closed economic system, just look at Cuba and North Korea. Sheer madness.


smith rock 1

The nature of any multiple-partners trade treaty is that no one will be totally satisfied, and every player will have some features to complain about. Creating and maintaining these treaties is a balancing act. By upsetting the balance, there are predictable chain effects. Throwing a temper tantrum in a china shop is bound to break things. We may not predict which pieces will be broken, but breaks there will be. We may think we’re invulnerable to the consequences of breakage, but history teaches otherwise.

Do Trump supporters recall his justification for making some of his products in China, such as the MGMA hats and Trump ties, that he was responsible to his investors and family? So why is Harley-Davidson, using the same justification to move some of its manufacturing operations overseas to fend off the tariffs from the “shoot-your-own-foot” trade war, accused of betrayal?

Trump’s trade advisor, Peter Navarro, a Harvard professor no less, seems to have caught the “making no sense” virus. Navarro claims that China’s bad-faith trade practice is responsible for “stealing” millions of jobs from US. When our unemployment rate is at all time low, a trend started by the Obama administration’s efforts in rescuing us from the 2008 economic Recession, where did these stolen jobs go? Further, the illegal immigrants are also have “stolen” millions of jobs from us. You’d think our unemployment rate would approach 8% owing to a lack of jobs, with so many millions having been stolen. Nonsense is ok now that ideology trumps everything.

weird rocks

New York Times columnist Bret Stephens sums it up well: “It’s fair to say that the U.S. could use its leverage to negotiate more advantageous trade deals. It isn’t fair to insist on politically untenable trade concessions he [Trump] knows other countries won’t make — a sunset clause for NAFTA, for example — in order to destroy these agreements permanently while blaming the other side… America First is America Feared. But it is also America hated, and hated with justification. Where’s the upside in that?” But Trump supporters confuse “being hated/feared” with “being respected.” Nuances are lost on Trump, and nuances are lost on his supporters.

Just look at the TPP, Trans Pacific Partner Agreement; it is about opening markets as it is about intellectual property. It is a way by which to contain some of China’s egregious “intellectual theft” acts. It shouldn’t be a big surprise to anyone that the treaty is not perfect, but it’s a mechanism that carries some weight. However, Mr. Trump and his lieutenants simply pulled the US out of the agreement, for what? Spite? Ignorance? Campaign promises? Which are probably the same in Trump’s case. The resulting hole made by American’s departure has given China a golden opportunity to step in and assume the leading position, which means that they now can ignore international intellectual property laws (i.e. treaties) with impunity. And if that was not bad enough, Trump then started adding tariffs willy nilly. Tariffs are about goods, and so will not themselves resolve issues of intellectual property theft. By all historical and economic perspectives, tariffs generally hurt the economy more than boosting it.

People least able to afford the extra costs resulting from tariffs will be affected the most. Since most of these affected are farmers overwhelmingly voted for Trump, he offers them $12 billion in aid. But this is only the latest. As the toll from other tariffs grows into additional sectors, are we going to keep bailing them out as well? So, in addition to paying higher prices for imported goods due to the trade war, we will now incur additional taxpayers’ money to compensate for the lost revenue for our exported goods. Wouldn’t buying votes be cheaper? Illegal? Since when would that bother Mr. Trump and his supporters?


I share two readers’ poignant observations: “Remember when we had a President interested in solving problems he didn’t make, instead of making problems he is incompetent to solve?”

And to tie back to my opening critique on (the lack of) business acumen in negotiation, I thought the following list is very revealing, don’t you?

Bankruptcy = 6 times
Trump University = Failed
Trump Fragrance = Failed
Trump Coffee = Failed
Trump Shoes = Failed
Trump Home Mattresses = Failed
Trump Urine Test = Failed
Trump Airways = Failed
Trump Steaks = Failed = Failed
Trump Plaza Casino and Hotel = Failed
Trump Vodka = Failed
Trump Mortgage = Failed
Trump Marina Hotel Casino = Failed
Trump the Game = Laughably Failed
Trump Magazine = Failed
Trump Taj Mahal = Failed
Trump Ice = Failed
New Jersey Generals Football team = Failed
Tour de Trump = Failed
Trump on the Oceans Resorts = Failed
The Trump Network = Failed
Trump! Radio Network = Failed
Trump Pillows = Failed
Trump New Media = Failed
Trump Ice spring water = Failed
Trump International Hotel and Tower (Dubai) = Failed
Trump tower Baku = Could be the worst failure

Given such a background, why does Mr. Trump still have so many faithful followers? Once again, that “cult personality” comes to mind. So, is it America first? Or Trump first?

Till next time,

Staying Sane and Charging Ahead

Gritting Your Way…Toward What?

Growing for the sake of growing is a mindless exercise.

Most human beings are complex, capable of holding several ideas at the same time. Yet, many of us are also keen on catchy phrases and regard a few bumper stickers as profound philosophies. Nothing wrong, just is. Still, it behooves those of us who yearn for deeper meaning and lively discussion to be more aware of the pitfalls of attractive one-liners or descriptors.

I am coming to the main point.

Grit” has been the buzzword in the education field for quite a few years by now. The researcher, Angela Duckworth, who coined the term in her years of study was granted a MacArthur Fellowship award in 2013. That further bolstered the attractiveness of the concept. Students possessing grit, the ability to sustain interests and meet challenges over a long period of time, do better academically than those who give up more easily. You want the workplace staffed with adults who had this trait developed during childhood. I wonder how that applies to hedge fund managers… Anyway, the majority of the parents would say, “But of course,” and wish their children to acquire more grit.

Naturally beautiful even as petals drop...

Understandably, children with grit are likely to carry that attitude and habit into adulthood. On the other hand, it would take much longer and more effort for adults to develop grit. I can just see some HR (human resources) departments requiring interviewees to submit their “grit” scores from 2nd grade. I am betraying my bias, and I will explain it after I introduce another concept, “growth mindset.”

The term “growth mindset” is usually presented as the contrast to “fixed mindset.” In the former, a person holds a dynamic view of the world and of herself, and so she would always strive to improve herself regardless of her endowed talent and intelligence. The “fixed mindset” sees the person’s talent as a be-all-end-all attribute; if he doesn’t have talent in a particular area, hard work alone isn’t going to lead to significant achievement. People with “growth mindset” regard failures as the inevitable byproduct of improvement; people with “fixed mindset” regard failing to meet standards as a profound blow. I described these differences more closely some time ago. At first glance, this seems to make sense. On looking closer, the wording of these concepts reveals underlying biases: Who wants to be labeled as “fixed” and not desiring “growth?” Not surprisingly, growth mindset overlaps with grit; both entail working hard to better oneself.

How can anyone argue against instilling resilience and bettering ourselves? Having the grit to grow one’s mind is admirable. But there is a key ingredient missing in these equations: Toward what end?

This is similar to the critique of “goal” by a prominent scholar, James March: Being goal-oriented or having goals is fine, but how do we evaluate the content of goals? For instance, is pushing for 100% safety record a good goal for an R&D entity? Would 93% be acceptable? Would 80% be considered a failure? Should diversity for, say a 5,000-employee organization, perfectly reflect the society’s racial composition?

Dramatization certainly makes it interesting...but beautiful still?!

In perpetuating some of these catchy concepts or phrases, we often pay too much attention to their potential benefits and neglect what it is we hope to achieve and more importantly, why. In the education arena, adopting “grit” and “growth mindset” has lead us to emphasize “praising the students’ efforts” while overlooking the content of their learning, and abandon the hope that learning itself is an exciting enterprise. Our sole goal seems to be that our students strive to test well. Good signals? I grew up in an all-grit educational environment; it was grueling at some times and pointless at most times.

These days, when kids hear “You’ve tried really hard, don’t worry about the outcomes yet,” they can’t help but think “Oh, I am really not good enough.” Students hear “trying/working hard” as code for “not very smart in the first place.” Put it differently: If we ask 100 kids picked at random to practice the violin with all the grit they can muster, how many do you think you’d enjoy listening to? If 10 students perform well, what should we do with the other 90? Tell them to develop more grit? Instead, how about we try harder to discover what would really make the other 90 kids excited, for which they would be “happy” to generate more grit, without being asked to? Applying this same principle to organizations: Wouldn’t it be more productive to task people with the activities they are naturally good at, and for which they would willingly “grit” their way to accomplish more than expected? Wouldn’t this be the win-win we truly desire?

But the way things are practiced in schools and organizations, the message is still that we need external definition of what we ought to do and external rewards for our “improvement” at it. Remember, intrinsic motivation is a whole lot more effective than extrinsic rewards. This notion has been robustly proven and resonates with almost everyone; however, it is largely ignored in organization (and school) life. People, of all ages, see empty praise and compliments for the manipulative moves they are. As Alfie Kohn, an independent scholar and a proponent of progressive education, puts it succinctly, “…the most salient feature of a positive judgment is not that it’s positive but that it’s judgment; it’s more about controlling than encouraging.”  Positive judgment may tickle us for a little while, but only fleetingly.

This doesn’t mean that we should forego all compliments and praise, but offer them with concrete evidence and useful feedback. People, again, of all ages, welcome specific information; they can better grow their minds knowing what, how, and why.

more like devil here, thanks to photoshop!

Another missed dimension in typical self-help promotional materials is the assumption that if only individuals did their part… In other words, adjust yourself to adapt to the changes. This is the fundamental flaw in the “Who Moved My Cheese?” which I wrote about before: You don’t get to question the content of the changes; you just need to adjust your own attitude and behavior. So, one of my favorite examples concerns the low rate of young women studying science (and I include math and engineering under that umbrella). Applying the “growth mindset” and “grit” concepts, we only need to focus on telling women that it’s all in their own minds. There is no institutional sexism in society; organizations really welcome all talent. Right, and I’ll win the next lottery.

My final point is this. There are valuable aspects of “grit” and “growth mindset.” But let us please grow our minds to go beyond the either-or mindset. Let’s develop our individual minds so that we can better evaluate our environment and question the structures of our schools, work organizations, governing entities, “smartphones” (maybe rename them “effortphones!”), the internet of things, etc. Let’s honor people’s desire to be autonomous, master their desired skills, and locate their own sense of purpose. Sometimes, it isn’t about us; sometimes, we need to strive for changing our environments and systems.

Till next time,

Staying Sane and Charging Ahead.

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Seriously, It’s Not Always About Money

Why do people want to work? Why do you want to work? Is the paycheck the only incentive? Do only professionals care about “the meaning of work?” While there aren’t straightforward answers — and philosophical discussions are called for – Professor Barry Schwartz in his “Rethinking Work” informs us that empirical evidence has pointed to “we want more than just monetary reward from our work,” and it applies across the board

barn catMore than a decade ago, the Yale organizational behavior professor Amy Wrzesniewski and colleagues did a study on custodians in a major academic hospital. These custodians’ job description never included assisting patients in any manner, but many of the custodians would go out of their ways to interact with and assist patients and their families, such as joking around to lighten the mood, tucking in rumpled bed sheets, distracting patients while nurses hooked up tubes or drew blood, or even “dancing for them.” One custodian decided to postpone vacuuming the waiting room because some family members had fallen asleep. For these acts of kindness and considerations, the custodians never got extra pay; yet, it was the prospect of feeling useful that “got them out of the bed in the morning.”

Before you argue that it’s the setting – perhaps hospitals command compassion (not everyone’s experience) – that influences people, other studies also confirm that regardless of the type of work, some people always look for higher purposes in their work environments, including even call centers. I emphasize “some” because not all people desire autonomy and purpose, both professionals and laborers.

The findings from these studies have been widely cited, yet they never seem to have reached management in most organizations. Managers by and large still hold onto the “old” belief propagated by Adam Smith (and his disciples) in his “The Wealth of Nations.” Perhaps from his observations but certainly not from impartial evidence, Smith postulated that “it is the interest of every man to live as much at his ease as he can,” and therefore since people are that lazy, they would work only for pay. Remember, such assumptions were also the premise of Frederick Taylor’s scientific management that helped make assembly line work profitable. A reader, William Farina, author of “The Afterlife of Adam Smith,” responding to the New York Times article, “Rethinking Work,” informed us that Smith made the “lazy” assertion mostly based on his own profession at the time, a professor on a fixed salary. Further, Smith believed that “rivalship and emulation” would better motivate people. And even this assumption has been debunked.

Still, we keep the old assumptions like a security blanket; it may not smell great but it’s comforting…to children who need them.

I don’t presume to criticize Adam Smith’s seminal contribution; however, I resonate with Professor Schwartz’s perspective that we might have taken Smith’s assumptions for granted and created a self-prophetic process. If we assume people are fundamentally lazy, cheating and stealing at every chance, we would set up organizational structures accordingly, with rules and watchdogs. When people at work feel constrained, they find loopholes to give themselves breaks, release boredom, or just to rebel. And lo and behold, the manager spots rule breakers and confirms the assumptions that probably all people are lazy and want to cheat. By the way, aren’t managers workers too, more cogs in the organizational gears? And thereby also assumed to be lazy? The tragedy of such deficit thinking was what prompted me to start writing on these issues.images-2

Human nature is complex; it has dark sides, positive sides, and a whole lot more than 50 other shades in between. How did we latch onto the negative assumptions made by Adam Smith? Why didn’t we instead try to explore and exploit the better sides of human nature? Even Smith’s assertion that there is a trade off between work satisfaction and efficiency – in order to gain organizational or production efficiency, we have to ignore employees’ job satisfaction – has been thoroughly refuted. Research findings have yielded strong evidence that where people find engaging, challenging, and meaningful work they help increase the organization’s overall performance and profits. Conversely, “there is a human cost to routinizing and depersonalizing work.” From this angle, Professor Schwartz’s last sentence in his article, “Half of our waking lives is a terrible thing to waste” is heartbreaking.

I know this post feels like a downer but we need to understand the sources of some of our organizational ills. Hence my constant rallying cry,

Staying Sane and Charging Ahead

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Socially Constructed Reality of Amazon’s Inner Working

The immediate responses to the lengthy New York Times’ article on the inner workings of white collar professionals at were almost as intense as article’s content. The 5,800+ readers’ comments are by far the most any New York Times’ article has ever elicited. The very next day, a post on LinkedIn provided a detailed rebuttal by Nick Ciubotariu, one of the system engineers/managers from Amazon. He emphasized that he wrote the piece totally on his own initiative. Amazon’s owner/CEO, Jeff Bezos, in addition to directing the employees to read Mr. Ciubotariu’s article, issued a public statement with the basic gist that the Times’ image of Amazon isn’t what he recognizes, and that all employees who ever witness the ugly stuff portrayed in the article should email him directly. (I wonder how many such emails he will actually receive? I don’t wonder that we’ll never know.)

I am not at all surprised that plenty of Amazon insiders would defend the company – otherwise cognitive dissonance would drive an employee crazy if she didn’t leave the company – nor am I surprised at the chorus of ex-Amazonians’ concurring with New York Times’ narrative of the company’s brutal working culture. What surprised me, sadly only a little, was how many people seemed to think that Amazon’s demanding working culture is unique to Amazon. Have they forgotten how Walmart locked in workers overnight? Do they not know the grueling hours medical interns (and sometimes doctors too) have to undertake? Of course, some people have pointed out that professionals in law, finance, or high tech also work 80+ hours a week, spending ½ of their vacation time chasing emails and fulfilling scheduled conference calls, or springing right back to work after a not-so-major surgery. Gee, is that supposed to make us feel better?!

What’s really depressing is that it doesn’t matter even when (some) companies offer generous policies for employees to take time off. If the organizational structure is such that people feel they have to stay competitive, most of them will forgo the offerings from such policies.

A little whimsical visual provides some counterbalance to this article.

A little whimsical visual provides some counterbalance to this article.

What angers me most is the category of response that goes something like this: Work is not a child’s play; it’s hard. Deal with it. You shouldn’t expect a country club environment. Implicitly implied in the “country club environment” jab is that such a “cushy environment” would dull your mental state and lure you into shirking even more. This either-or dichotomous worldview is simply detrimental, full stop. Google, Apple, a few other tech giants, as well as some major players from other industries, are known for offering their employees a “country club” work environment or benefits, and we don’t hear, at least we haven’t heard, that their employees are just lazing about and taking advantages of their companies.

A second category of response that drives me batty is “data management.” While I am totally on the side of using evidence and data whenever possible, I object to the implied notion that as long as managers use data, all’s well and forgiven. Data is just information, which can be distorted. Decision, on the other hand, requires thinking, knowledge, wisdom and courage. Hiding behind data doesn’t justify pitting employees against each other, normalizing 80+ hours work weeks, and data definitely do not lend sympathy to those who suffer physically and emotionally at work and outside of work. Context gets lost in data. If data can dictate everything, let’s eliminate management.

I applaud Bezos’ efforts of making his “leadership principles” actionable; it is especially remarkable that he seemingly has instilled in most of his employees the desire to also act on those principles. However, how sustainable is the intensity of Amazon’s work culture? Put it another way, can Bezo’s goal of “perpetual start-up spirit” at his company go on and on? The image comes to mind is stretching an elastic band. I said that I don’t know the answer to this question in the previous post. I still don’t. However, drawing analogies from the laws of thermodynamics, continuous improvement (link) of anything, productivity, safety and security, competition, or perpetual growth requires an infinity of resources just to fuel it, and another infinity of resources to combat entropic deterioration. Yes, Amazon can afford to have a high turnover rate, because despite its reputed hypercompetitive environment, there are always people who thrive in that kind of atmosphere, or people who just need a job. For now. However, it cannot go on in perpetuity. What remain unanswerable for me are:

  • Is this high octane work environment what we will face all over the workplace in the not-so-distant future? One factor against this, is that a good portion of the millennial generation is rejecting such notion. But that’s just one factor.
  • What would Amazon be like in 10 years?

Next time, I will ponder on the consumer angle of “working inside of Amazon.” Till then,


Staying Sane and Charging Ahead.

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Amazonians, Amabots, Amholes – Working for

It would have been better timing for me to post this workforce-oriented article on the Labor Day weekend, but I wanted to honor my commitment to my family. My attitude might be “old-fashioned” in the fast-paced tech world, and I am pretty sure that I would not survive for even one day working at places like So I read the New York Times’ exposé on the workings inside Amazon – focused largely on white collar professionals – with mixed feelings.

Big animal with big horns.

Big animal with big horns.

The Times’ article is long, about 6,000 words, but the gist is an age-old issue manifested in the modern tech-savvy world: How to maximize employers’ utilization of employees’ labor or brain power. Decades ago, Frederick Taylor’s scientific management, studying time and motion in labor-intensive work tasks, made assembly line work possible, and profitable. In modern service oriented industries, the race is on how to incentivize (I really hate this word, but, ah well…) professional brainiacs.’s owner, Jeff Bezos, started his enterprise determined to not let the company slip into the typical corporate culture of bureaucracy, regimented rules and processes, or conventional practices of any kind. He intended, I am sure still intends, to instill in Amazon a “perpetual entrepreneurial” spirit. One can hardly argue with his “leadership principles,” such as customer obsession, hire and develop the best, or insist on the highest standards. Would anyone object to these ideas? Further, most people would react with, “Finally!, someone with vision.” However, like all statements de jour of vision and mission, and pledges of ethical behavior, the ultimate test lies in the execution. The New York Times’ article is about how Amazon has executed these “leadership principles.”

The article portrays the Amazon’s white collar environment as a high-octane, fiercely consumer-oriented, constantly striving for excellence, in which colleagues could be supportive, demanding, competitive, or back-stabbing. Nothing new, just magnified by 10 at Amazon. For instance, many who have worked at Amazon mentioned colleagues leaving meetings in tears, from the combative, confrontational tone of “critiquing” each other’s ideas. While this may not be universal across Amazon, how widespread should it be? would 10% of the work force – 180,000 employees – be acceptable? 20%? Working 60-80 hours a week is a norm; conference calls on Thanksgiving or other holidays are necessary at times; keeping up with emails while on vacations isn’t a rule but is expected… All true also in many other organizations; however, at Amazon, a person receiving an email at, say 10 PM might get a follow up text if that person doesn’t respond the email within an hour. People who take time off tending sick loved ones, taking care of one’s own chemotherapy and recovery process, or dealing with grief often find themselves being put on “performance improvement plan.” In other words, your time off is on you and will reflect against your career progress. Again, this isn’t unique to Amazon, just bigger per the company’s Amazonian size. As one former employee said, “When you are not able to give your absolute all, 80 hours a week, they see it as a major weakness.” (NYTimes report)

There is never a shortage of thorny issues in organizations.

There is never a shortage of thorny issues in organizations.

Not surprisingly, many young people, especially singles with fewer commitments outside of work, thrive in Amazon’s work environment. Many also see their “short” stint – however one defines it — at Amazon as a stepping stone for better career opportunities elsewhere. And some leave the company feeling drained and needing a lengthy period to recover. Regardless of how the employees, former or current, handle the work environment, one thing seems clear; their work habit sticks with them, for better or for worse. For those who thrive on the intensity, they continue their “pursuit of higher performance” wherever they go, and thereby make themselves attractive to the next employer. Others who leave the company with a bad taste, may nevertheless appreciate the Amazon discipline. It’s not that the latter group doesn’t care for excellence, they just prefer excellence as manifest in a kinder spirit of their own definition and choosing.

Ultimately, my major question is: Would “perpetual start-up spirit” within one entity eventually morph into its own conventional form and choke off the very spirit it has tried to engender? I don’t know the answer…and, not knowing the answer would be another objectionable response at Amazon. Truly, I wouldn’t survive for even half of a day.

In the next post, I will summarize some reactions to this article…and of course add my own nickel’s worth. Till then,


Staying Sane and Charging Ahead.

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Note: “Amazonians” and “Amabots” are used internally by people working in Amazon, but “Amholes” are used by some outsiders.

The Cul-de-Sac of “High Achieving”

This time of the year, around the anniversary of my immigrating to the States, I tend to do a little more navel gazing. This year, I find myself reflecting on a term with which I have some issues, “high achiever.” The expression usually implies that someone has achieved more than…but what? It also connotes a high degree of competitiveness.

mt baker 3

I hate competition. Competition makes sense in sports and in related environments where repetition or efficiency is the goal.  In the Chinese/Taiwanese education system, we are expected to be competitive; we need to make our parents look good. Such a burden. My mother, bless her soul, of course wanted all her children to do well (what parents wouldn’t?), but she would never brag about her children’s “accomplishments.” The high school I went to was the best (girls’) high school, and the atmosphere felt like the premed frenzy in this country, although I understood the comparison only after I came to the States. In my high school, we all learned not to let on how hard we had to study for quizzes and tests, and some would actually beam or strut around, albeit subtly, after besting fellow students. Those three years of high school were the worst time in my life.

I don’t accumulate degrees or awards as badges of honor; I simply enjoy learning and exploration. If that means getting degrees and awards, so be it. I don’t regard them as having achieved anything special because for me, it’s all about finding something to be excited about…and the weirder it is, the more fascinating it is.

And I know plenty of people who are like that, regardless of their educational background. Some of the people I most admire have “only” high school diplomas, and some of the PhDs I have known are downright obnoxious. Such superficial accolades are just that, superficial. Years ago, one of the entrepreneurs I met had a PhD in biology but eventually acknowledged and accepted that his true passion was – and still is — woodworking. When he and I compared notes, we discovered what “competition” meant to us both: It’s about competing against ourselves, against some amorphous standards we keep updating, based on everything around us.

The conventional “high achieving” environment is actually quite toxic because it’s based on zero-sum competition mode where my win would have to be at the expense of someone else’s loss. It’s a scarcity mode of being. In such an environment, most people lose by definition. This attitude partly contributes to the ever-increasing stress levels on students, particularly during their high school years, and on employees who see the managerial ladder as the only success measurement. (See the “suggested readings”.) After you achieve a 4.0 GPA – sorry, I mean, 4.75 – then what? After you become a VP, make tons of money, or build five casinos, then what? What will you have accomplished?

I don’t readily know how to make a distinction between “high achievers” and those who forever follow their curiosity and passion. I’d love to hear your take-on and suggestions.

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Spend On A Dress Or A Dresser? — A story of near-sighted and far-sighted

A decidedly unfashionable computer mouse prototype.

A decidedly unfashionable computer mouse prototype.

One man’s ego and antics are finally catching up with him and causing his own company to struggle and decline in a “complicated” industry. Another man’s strong will and principles are keeping his company afloat in a declining yet highly competitive industry.

It took more than a decade for the board of directors to take note of Dov Charney’s (founder and former CEO of American Apparel) misbehavior and mismanagement. In contrast, John Bassett III has spent more than a decade fighting for his company, Vaughan-Bassett Furniture, his workers, and his principles, and rallying a whole industry to take on the country of China. Alas, the jury is still out on the fate of Vaughan-Bassett’s furniture company. Vaughan-Bassett is a separate entity from the original Bassett furniture company, which has closed many factories and laid off thousands of employees, and is now only a shadow of itself in its glorious early days. The original company is publicly owned and has to answer to shareholders, while Vaughan-Bassett employs 700+ people and is privately held.

The US furniture-making industry has been declining since the beginning of globalization. We still need furniture, but few are willing to pay higher prices for American-made products; the price difference between imported and domestic furniture may be hundreds of dollars and more per item.   The price difference between imported and domestic items in the fashion industry is much less than in the furniture industry. Thus it is much tougher for owners or CEOs in the furniture industry to compete against imports than it is for the fashion industry. Both American Apparel and Vaughan-Bassett have been using strictly American produced materials, and both seem to care for their employees. Yet…

Mr. John Bassett III fought and won an unprecedented anti-dumping action against China for underpricing furniture. To file this complaint, he had to organize more than 51% of the US industry players — who were all being squeezed to narrow or nonexistent profit margins by competition from cheap imports — to speak with one voice and to share legal fees. In order to prove that China was stealing Vaughan-Bassett furniture designs and practicing dumping with state sponsorship, Mr. Bassett III and his son themselves did some undercover work in China. (He first sent his son on the mission to discover those factories responsible for the dumping, and his son wasn’t to return till he accomplished the mission. Then, Mr. Bassett himself went to China and had a “chilling” meeting with the culprit.) When the US furniture industry finally won the case, Vaughan-Bassett was awarded $46 million of which Mr. Bassett used the majority to provide workers with modern tools and resurrect an empty factory. The original Bassett company received $17.5 million dollars and used most of it to “buttress the retail expansion.”

For some background stories, you can find them here, here, and here. For interested readers, Beth Macy’s “Factory Man” was just released.

Switching to a different industry, and thanking Mr. Charney for generating controversial ads, juicy stories, and prime examples of “how not to run a big and growing company.” I have to admit that I only recently learned about the name “Dov Charney” from the New York Times article by Joe Norcera on Mr. Charney and his company. However, American Apparel’s board of directors has no such excuse; they have been intimately familiar with Mr. Charney’s bad-boy conduct. There have been several sexual harassment lawsuits against Mr. Charney, some of which were bogus but with two ending in out-of-court settlements. Charney has been known to personally choose his own employees for ads, and some were quite sexually charged. The images might offend some people, but more importantly, in such an atmosphere, how can we “expect the office to be run like a convent,” as Norcera aptly points out. Equally important is Mr. Charney’s horrible record of management. Like many entrepreneurs, Mr. Charney might have been talented in the startup phase; however, he has demonstrated neither knowledge nor talent, and definitely no humility, in managing a maturing company. Since American Apparel went public in 2007, Charney has gone through several “talented” executives. (Personally, I can’t believe all these executives were truly talented, but in the absence of long tenure, it’s easier to attribute talent to them.) As Norcera documents, “[Charney] told The Wall Street Journal that the man he hired [as the chief financial officer] was a ‘complete loser.’ Which of course caused the man to quit.”

Computer mouse prototype 2, still no sense of fashion.

Computer mouse prototype 2, still no sense of fashion.

Further, Mr. Charney committed the classic error of many entrepreneurs, expanding too fast. A 2009 immigration audit lead to the company’s laying off half of its factory work force, and resulted in “delayed shipment, and an expensive hiring and training program.” The company’s stock has been steadily declining since then. However, it still took the board till June of this year before finally forcing out Mr. Charney. Of course, the fight isn’t over.

The lesson I draw – and I am sure there are other lessons – is that, be they entrepreneurs or CEOs, manager-leaders need a healthy network of colleagues, associates, and friends to get things done, to grow, or to do anything. By “healthy” network I mean not just the size of the network but also the quality, especially in the diversity of thinking. The board of directors of American Apparel is not unlike most other boards, comprising mostly people who side with the CEO, people of like-mindedness. While Mr. Bassett sounds like a curmudgeon, or a benevolent despot, he has been more than willing to ask for help when he needs to, as in the anti-dumping case. Both Charney and Bassett III love the enterprises they built, but they took different paths to grow their businesses. It’ll be interesting to see which enterprise has more sustaining power.

Till next time,

Staying Sane and Charging Ahead.

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More Business/Management Myths, Or,

“It’s That Group Thing”… Some Like it; some avoid it, and everyone has issues with it.

Most organizations intend to improve their products and services.  If you are a manager, would you welcome one superb idea, or are you hungry for many more so-so ideas from which to choose?  If you have to choose, would you go for quality or quantity?  Given how much I detest dichotomous, either-or, framing, the answer to the above questions is – of course – “It depends.”

It depends on whether we are dealing with incremental improvement in a process, such as manufacturing operations, or with innovative breakthroughs that might lead to increased brand recognition or dramatic market share increases.  For the former, the organization aims for improved performance based on tweaking here and modifying there.  For the latter, the organization desires the “extremely” good idea that could dramatically change the organization’s market position.

And who better generates innovative ideas than a group of bright individuals, right?  After all, more minds spawn more ideas than individuals working alone.

Not so fast.

Rarely fly solo.

Rarely fly solo.

According to Girotra, K., Terwiesch, C, and Ulrich, K, in their recently published paper in Management Science, “Idea Generation and the Quality of the Best Idea,” a conventionally-formatted group, working together in the same space and time, generates less impressive outcomes than a “hybrid” team does.  Individuals in a hybrid team work on ideas alone first before they collaborate on improving the collection of ideas: assessing, selecting, and modifying.  These authors also confirm what others have pointed out over the decades, that brainstorming is not nearly as effective as it was first advocated in the late 50s.  Why?

In a typical group, people deal with not only free riding (see footnote below), but more importantly, the inhibitions they implicitly place on each other (“evaluation apprehension”).  There is always a tendency for groups to move toward a norm, and thereby discourage “wild” ideas. More often than not, group members “build onto” each other’s ideas…a useful technique for incremental improvement, but not so much for innovation.  What’s more, when one person is delivering her idea(s) in a meeting, others have to wait for their turns (“production blocking”).  It is not the most efficient way of spending one’s time.  And I am not even going to discuss the issue of introvert-extrovert, even though this dimension is bound to have impacts on group performance.

In their paper on idea quality, the authors highlight three flaws of previous studies on groups and innovation:

  1. Previous literature on innovative ideas has been focusing on the number of ideas generated by groups, assuming more ideas are likely to lead to better ideas.
  2. The traditional literature defines “quality” of innovative ideas by using average rating.  As the authors point out in their theoretic foundation, innovation is about the best ideas, not the average of ideas.
  3. In addition, often only a couple of research assistants rated the quality of ideas.  This practice makes both the validity and the reliability questionable.

So, the authors of the current paper provided a much more rigorous challenge and realistic scenario for participants on idea generation.  As for rating ideas, they used a “web-based” rating system so that each idea received on average 20 ratings.  They also introduced a “purchase-intent” survey for more realistic assessment.

The authors found that the hybrid team generated three times more ideas than the conventional team and that hybrid team’s best ideas were much better than the conventional team’s.

Granted, this study’s findings need to be replicated and confirmed before we should fully embrace the hybrid team concept.  However, the logic of the paper is sound, and the findings are strong.

Yes, I have biases; I especially like it whenever my suspicion is proven right or my preference is vindicated, as in this case.  Yet, studies like these also frustrate me because they remind me again of the disconnect between what we have known and what we have practiced in management.  For instance, tying CEO’s pay to company performance has not proven effective, yet we still have skyrocketing rises in CEO’s pay.  Brainstorming is not especially effective as conventionally done, yet we keep doing it.  We know that the relationship between teamwork and performance is tenuous at best, yet we still impose teaming as our first course of action.

Working alone most of the time, but does hang out with others occasionally.

Working alone most of the time, but does hang out with others occasionally.

Dan Pink’s talk on motivation, highlighting “autonomy, mastery, & purpose” as the incentives to bring about better productivity and results, might be too dramatic for most managers to embrace immediately.  However, forgoing brainstorming shouldn’t be that difficult.  As my M&M piece indicates, canceling a few meetings will win gratitude and likely bring about higher productivity.  Seriously, is there any danger to experimenting with the “hybrid team” model?  Why not try it and see for yourself?

Till next time,

Staying Sane and Charging Ahead.

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“Free ridership” is a problem that will probably persist in perpetuity.  Free riders occupy one end of the “bell curve” in the normal distribution.  A more pertinent question is, how much resources do we want to devote to detecting and monitoring them?  Granted if “free riders” increase over time, it is a problem.  However, we need to assess how many is too many?  Personally, I would much rather see organizations devoting resources to improving the work environment, thereby making the “free riders” problem almost insignificant.

The Marshmallow Problem & The Candle Problem

Being part of a team-building exercise or being tested…both exercises drive me bonkers.  However, a well-designed test/problem, with a convincing structure and valuable conclusions, intrigues me.  When I learned about the Marshmallow Problem, I was immediately reminded of the Candle Problem.  I learned both from TED talks.

In Tom Wuject’s presentation on the Marshmallow Problem (MP), he emphasizes the context of collaboration in solving the MP, and in Dan Pink’s illustration of the Candle Problem (CP) he focuses on the issue of intrinsic vs. extrinsic motivation.  There are similarities in solving these problems, but one particularly important condition in driving the test results may be counterintuitive.  I love counterintuitive phenomena, especially those that resonate with my own predilections.

Did the Indians have a planning meeting before building this fabulous structure?

Did the Indians have a planning meeting before building this fabulous structure?

In the Marshmallow problem, teams of four are presented with:

  • 26 sticks of spaghetti
  • 1 yard of tape
  • 1 yard of string, and
  • 1 marshmallow.  The goal is to build as tall a structure as possible, with the marshmallow sitting on top.

Typical participants go through the motions of: talking about design, jockeying for power in driving the team, devising some plans, and then, as time runs out, assembling the materials and sticking the marshmallow on top.  Most of the structures collapse under the weight of the marshmallow.

Among the professionals who have participated in such a workshop, the worst performers are the recent graduates from business school.  They lied, cheated, stole, and thought excessively highly of themselves. Hey I am just reporting the outcome here.  One of the top performers was…ready? Make a guess?  Yup, my favorite group: children.  In particular, recent graduates from kindergarten.  They did not attempt to seize any power.  They just plunged into the task.

The children usually do not plan first.  They “simply” do.  The doing produces a prototype – already with the marshmallow on top — from which they can make improvements.  This is exactly what is promoted in the Knowing-Doing Gap book (which I summarized earlier).  The best performing group is “architects and engineers;” their structure was on average 39”.  The overall average for all participants was 20”.  We should all feel reassured.  And the next best group that performed pretty well was administrative assistants.  What Mr. Wujec pointed out was that the well-performing groups utilized their specialized & facilitating skills.  I think the kindergartners performed well because they didn’t have preconceived notions of design or social behaviors.

When Wujec introduced a new element (that counterintuitive condition) into this problem, offering $10,000 as an incentive, the result was fascinating.  All groups failed!  This outcome dovetails with the Candle Problem.

In the CP (which is applicable to either individuals or teams), you are presented with the following materials:

  • a box of thumbtacks
  • a candle, and
  • a match book sitting on a table. The goal is to attach the lit candle to the wall without dripping wax onto the table.
A corner of the Getty Center, an architectural feat.

A corner of the Getty Center, an architectural feat.

In general, people take 5-10 minutes to solve this problem.  The canonical solution?  You empty out the tacks, tack the empty box to the wall, place the candle in it, and light it.  The key is the box, and once we let go of the “functional fixedness” of the box as an obligate container of tacks, the solution is obvious.

Now, Mr. Pink gleefully described a twist (that counterintuitive condition) into this experiment:  the researcher told one group to solve the problem as fast as possible and that their time would be established as a norm.  To the other group, the researchers offered a monetary reward.  The group with the offered incentive took 3½ minutes longer.  Longer.  When researchers divided participants into three groups, and offered small, medium and large rewards respectively, guess which group performed the worst?  Yes, the one with the highest incentives.

The candle problem study has been replicated over 40 years, across different cultures.  In fact, tests with variations on the incentive all have lead to poorer performance.

Another twist:  instead of placing a box of thumb tacks on the table with other items, the tacks are taken out of the box.  So, visually, you see four elements present on the table now: loose thumbtacks, empty box, candle, and matchbook.  In such an experiment, external incentives work.  Why?  Because the solution is much easier to derive.  Mr. Pink’s message:  When tasks are mechanical and repetitive, incentives and rewards work.  When even rudimentary cognitive skills are required, monetary rewards inevitably fail to optimally motivate people.  “Rewards narrow our focus,” and when the tasks require us to think broadly or out-of-the-box, narrowing our focus is detrimental. 

I highly recommend viewing these two talks; they’re a great 30-minute investment.

Why does the business world still obsess with awarding monetary incentives?  Yes, most people like money, but businesses need results that bring profits. When people are given autonomy, instead of incentives, to produce results, they inevitably perform better. So, there is a profound disconnect here. Why doesn’t the business world use results-oriented model?  I suspect it has much to do with not being able to let go of the 20th century invention called “management,” which is all about control.  This is part of what this blog has been about.

Have a good week of practicing losing some control.  Till next time,

Staying Sane and Charging Ahead.

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Cooperate To Cheat…To Get A Good Grade, Or, To Learn?

Here is an interesting read:

To sum it up:

An UCLA professor of Behavioral Ecology allowed his students to create their own rules for a midterm test.  Instead of the usual closed-book test, he told his students a week in advance that they could bring to the test:  notes, books, laptop, experts (if they could locate one or two in time), calling former students who had taken this test before…anything not in violation of state and federal criminal laws.  After a barrage of questions and calming suspicion, the initially bewildered students began their collective plans for studying and facing the test.

On the day of the test, the students organized themselves to deal with the one question on the test.  Different groups took on different aspects, and they co-wrote the answer.  Only three students (“the lone wolves”) decided to write their individual responses, even though they actively participated in the studying and discussions.  Before handing back the test results, the professor added another wrinkle, offering students two options:  1. The norm — The students would get their test result back and it would count toward their course grade.  2.  A dilemma —  the professor would shred the tests and no one would know how they scored and no grade would be given.  Again, after the initial gasps, the students quickly made a unanimous decision to have their tests returned and counted toward grade.  They were confident in their ability.  They were right.  The average score for this test was 20% higher than previous years.  And the three lone wolves scored, respectively, on par, below, and above par with the class.

The professor’s intention for this experiment was for students to learn, first hand, the game theory that’s played out throughout the animal kingdom.  In the end for the class, all won; they all learned, including the professor.

Or, one could interpret the experiment this way:  Students lost because there was not much differentiation on this mid-term, other than the two lone wolves who scored above and below class performance.

This is yet another wonderful example of “socially constructed reality.”  But that’s not what fascinated me about this pedagogical experiment.  It’s the message that cooperation won over competition, both in terms of grade (20% better than previous record isn’t to be shrugged off) and learning.

What a lovely picture of cooperation!

What a lovely picture of cooperation!

What’s the lesson for organizations?  Allow people to make their own decisions and trust them to focus on their own best interests, which will in turn lead to better overall organizational performance.  Once again, this resonates with Daniel Pink’s TED talk on motivationautonomy, mastery, purpose.  These three pillars offer the organizational structure in which people are likely to give their best.  “Empowerment” has become an abused cliché; however, when unleashed in the right context and structure, as in the above example, it is genuinely powerful.

How about those shirkers or free-riders?  Well…what about them?  Evidently, in this pedagogical experiment, the students did not think it a profound problem.  The group rendered such few harmless; the group’s overall productivity can absorb a few infractions.  Do we want to lay down all the ground rules in the hope of catching those shirkers?  What do organizations actually do when they spot free riders?  Rarely do we hear clear-cut cases where such people need to be fired.  So why do we want to choke off creative and learning capacity for the larger group in hopes of monitoring the few?  Alas, most organizations keep adding obstacle courses for employees to prevent the few outliers from…what?  This was one of the points I addressed in my beginning posts on “Bad management theories.”

When I related this story to a friend, he was intrigued but said, “Thinking inside the box gets you profits.  Thinking outside of the box creates opportunities, though accompanied by mystery, pain, and risks.”  Drat, why didn’t I think of that?!

My friend was right.  In the end, this wonderful experiment was played out inside the box because the students were given the boundaries – the course materials covered thus far.  In a sense, the three lone wolves sort of nibbled the edge of the boundaries, but not much more than that.  More often than not, it’s the true lone wolf wandering off into a different territory who might find, or stumble upon, something new and awesome.  Especially in the face of uncertainty, cooperation leads to higher productivity than competition.  But to pursue ground-breaking innovation and creativity, one needs much more room.  I am not saying that all innovative and creative breakthroughs have been produced by individuals; however, given enough room, individuals stand better chance to hit that sweet spot.  There have been plenty of cooperative efforts that resulted in spectacular outcomes, such as the development of superconductivity, the transistor, penicillin, etc.  But remember, the discoveries of superconductivity and penicillin were individual accomplishments.  The marriage of multiple minds with unique ways of thinking subsequently leading to breakthrough discoveries seems more the exception than the rule.

Ultimately, it’s not either-or perspective in which we have to choose between cooperation or individual pursuit.  We can have both; we need to have both.

I will be on a road trip next week.  Be back in this space on May 19th.  Till then,

Staying Sane and Charging Ahead.

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