Outliers: The Story of Success by Malcolm Gladwell

Malcolm Gladwell is one of my favourite author simply because he can put across interesting idea in a very easy to read and comprehend manner. His works have actually influenced the way we look at things and the famous concept of tipping point is made famous in his earlier book. The book Outliers was actually published in 2008 and I have only recently completed reading this wonderful book. This book strikes a chord in me as it explains success in a way which is logical and not from the usual mainstream media of attributing success to hard work, brilliance, bla bla bla. I am not saying that hard work, brilliance, etc. is not important in one's success but we know from real life experience that there are a lot of people who are hardworking, brilliant, etc. and yet have find success to be elusive. While some have attributed that to luck, feng shui, etc., it is Malcolm's brilliant explanation which put things into clearer perspective. This book also taught me a great deal of how to make full use of circumstances in order to excel in one's chosen area.

Some excerpts from the book are summarised here to give some general idea about the book but I would strongly advise that one read the entire book which is fun and easy to read:

1) .......the values of the world we inhabit and the people we surround ourselves with have a profound effect on who we are. (Something which I try to practise now, i.e. if I want to be happy, I will surround myself with happy people and if I need inspiration, I will surround myself with positive and successful people. People to avoid at all cost: moaners and negative people)

2) It is those who are successful, in other words, who are most likely to be given the kinds of special opportunities that lead to further success. It's the rich who get the biggest tax breaks. It's the best students who get the best teaching and most attention.

3) Ten thousand hours is the magic number of greatness. (This is one of Malcolm's quirky theory - ten thousand hours are about the time required in order for someone to become good in a particular area. So, have you contributed ten thousand hours to your area of expertise?)

4) Practice isn't the thing you do once you're good. It's the thing you do that makes you good. (This is an important message especially to talented people. Don't waste your talent by thinking that you are talented and don't need practice)

5) "that intellect and achievement are far from perfectly correlated" (This is becoming more obvious now as aspects such as EQ are being studied more and more and which seems to give better correlations to success. For me, as a human being, we can only be successful if we are good as a human being, i.e. ability to work in a group, communicate with fellow human being, possess inner calm, etc. This probably explains why so many brilliant technical people are not as successful as people expect of them simply because they may be brilliant working on equations, machines, etc. but have failed as a human being)

6) .....practical intelligence includes things like "knowing what to say to whom, knowing when to say it, and knowing how to say it for maximum effect." (This is very important - the art of communication! Have you came across someone in your life who is brilliant but every words that came out of his mouth is either sarcasm or downright insulting? I certainly do and most of the time, these are brilliant people, brilliant on technical subjects but with obvious flaw in practical intelligence!)

7)........ in the end almost none of the genius children from the lowest social and economic class ended up making a name for themselves (This may sound sad but am afraid, I also believe in this harsh reality. Children from the lowest social and economic class are at an disadvantage because most often, they lack the confidence, social skills, etc. which is important in order to make a name for oneself).

8) .......no one - not rock stars, not professional athletes, not software billionaires, and not even geniuses - ever makes it alone (Technical people - please take this point seriously. Working with people is very very important. One cannot have the attitude of couldn't be bothered about the other lesser being)

9) Successful people don't do it alone. Where they come from matters. They're products of particular places and environments.

10) Those three things - autonomy, complexity, and a connection between effort and reward - are, most people agree, the three qualities that work has to have if it is to be satisfying.

11) ......... if you work hard enough and assert yourself, and use your mind and imagination, you can shape the world to your desires.

12) Cultural legacies are powerful forces. They have deep roots and long lives. They persist, generation after generation, virtually intact, even as the economic and social and demographic conditions that spawned them have vanished, and they play such a role in directing  attitudes and behavior that we cannot make sense of our world without them. (Malcolm argued that cultural legacies have much larger influence on us than we think)

13) Our ability to succeed at what we do is powerfully bound up with where we're from,.......... (Don't get the wrong message! It doesn't mean that we cannot be successful if we happen to be borned in less privileged surroundings. What is important is that we realise what we lack and then work harder to overcome those disadvantages. Realisation is key. Of course, we will have to work harder or make sacrifices in order to break through but the success will be sweeter)

14) But Korea, like many Asian countries, is receiver oriented. It is up to the listener to make sense of what is being said. (This book makes me realise the obvious. Asians, because of cultural legacies are usually very indirect when it comes to communicating comments / criticisms. As such, direct criticisms are usually frowned upon and can be even termed as downright rude. In the book, it was demonstrated that one of the reasons for high incidences of plane crashes in Korea previously is due to this cultural weakness where the second pilot is afraid to point out the errors of his captain (not directly anyway) even though at the end, it costs him his live and many others)

15) Who we are cannot be separated from where we're from - and when we ignore that fact, planes crash (For me, the main message is we must accept our own weakness and then work towards managing it)

16) Working really hard is what successful people do,............

17) Success is a function of persistence and doggedness and the willingness to work hard..........

18) Superstar lawyers and math whizzes and software entrepreneurs appear at first blush to lie outside ordinary experience. But they don't. They are products of history and community, of opportunity and legacy. Their success is not exceptional or mysterious. It is grounded in a web of advantages and inheritances, some deserved, some not, some earned, some just plain lucky - but all critical to making them who they are. The outlier, in the end, is not an outlier at all. (This essentially summarises the content of the book - are outliers really outliers and cannot be explained?)

In summary, this book is such a wonderful read and while I don't think some of Malcolm's theory is tested or proven, it will at least open up your mind and look at some of the things in the world from a different perspective. For that alone, this book is worth the time. Good luck and Happy Halloween.

Inspirational Quotes from Steve Jobs

Well, since it is a long holiday in Malaysia due to Hari Raya and National Independence Day, I will just re-produce something which I received from e-mail in this posting. I find it inspirational and hope you find the same too. What Steve Jobs achieved is really amazing and I wish him health and happiness.

The only way to do great work is to love what you do...
Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle.

You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down...
Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.
None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it's likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.
Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

Sometimes life hits you in the head with a brick. Don’t lose faith...
[on his being fired from Apple in 1984]
I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.[…] It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith.

When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back...
We think the Mac will sell zillions, but we didn’t build the Mac for anybody else. We built it for ourselves. We were the group of people who were going to judge whether it was great or not. We weren’t going to go out and do market research. We just wanted to build the best thing we could build.
When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back, even though it faces the wall and nobody will ever see it. You’ll know it’s there, so you’re going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.

Get your thinking clean to make it simple...
Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.

Some people think design means how it looks. But of course, if you dig deeper, it’s really how it works...
Design is a funny word. Some people think design means how it looks. But of course, if you dig deeper, it’s really how it works. The design of the Mac wasn’t what it looked like, although that was part of it. Primarily, it was how it worked. To design something really well, you have to get it. You have to really grok [understand] what it’s all about. It takes a passionate commitment to really thoroughly understand something, chew it up, not just quickly swallow it. Most people don’t take the time to do that.

Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose...
Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

Death is very likely the single best invention of Life. It is Life’s change agent...
No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.

Being the richest man in the cemetery doesn’t matter to me...
Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful... that’s what matters to me.

Stay Hungry. Stay Foolish.
Note – one of Steve Jobs's best speeches was delivered to students at Stanford University at their graduation ceremony, as recognised by Stephen Fry.
Some of the best of these quotes are taken from it. Here’s the full text.----http://news.stanford.edu/news/2005/june15/jobs-061505.html

The Economic Naturalist - Why Economics Explains Almost Everything

This book by Robert H. Frank is the second book on economics after my review of "The Undercover Economist" by Tim Harford. Similar to the book by Tim Harford, this book is also written in simple language for someone with no formal education in economics to grasp the concepts presented. This book attempts to answer some interesting questions through economics principles such as Why do 24-hour shops bother having locks on their doors or Why did Kamikaze pilots wear hemets?

The following are some of the key insights which have shaped the way I look at economics and I hope you will find it useful as well:

1) .....the human brain's specialty seems to be absorbing information in narrative form. (For technical people, this is a simple and yet important point. When conveying your message to layman, don't just present the facts. Give examples or better yet, make it into an engaging story. Technical people should strive to become better story-tellers.)

2) The 'no cash on the table' principle holds that freely available money seldom sits unclaimed for long. In the future, as in the past, the only way to make real money will be through some combination of talent, thrift, hard work and luck. (To put it in another way, you can only "take advantage" of people or situation for a short period of time, e.g. exorbitant price on ignorant customers but if you intend to make real money, it has to be through a combination of talent, thrift, hard work and luck)

3) The 'no cash on the table' principle reminds us to be wary of opportunities that seem too good to be true. (For me, the central message is we cannot get rich in a hurry. HARD WORK is required.)

4) 'Low-hanging fruit' principle - it is always best to exploit one's best opportunities first.

5) Many highly skilled jobs pay relatively little because they are seen as stepping-stones to other desirable jobs. The assistant chef's position falls into this category but the waiter's does not. Highly skilled people are willing to work as assistant chefs at relatively low pay because the position provides essential training and experience for becoming a head chef, a respected and well-paid post. A waiter's position, by contrast, is a limiting profession. Many waiters never go on to higher-paying jobs, and those who do typically do not owe their subsequent success to their background as waiters. (The current difficulties in attracting and retaining talent in the civil engineering consulting business, in my humble opinion, is due to the fact that becoming a top consulting engineer (i.e. head chef in the assistant chef's analogy) is no longer respected and well-paid. This stems from the larger problem of unrealistically low consulting fees due to uncontrolled numbers of consulting engineers. Usually, such problem can be self-corrected through free market mechanism where the weak consulting engineers will eventually be forced out of the business but unfortunately, in the civil engineering business, the government has strong influence through the award of public projects, quality control of civil engineering graduates, etc. Again, this is only one side of the argument. Read the next point for idea on how to separate the good from the average).

6) The potential attraction of a wage schedule that rises faster than productivity is that a dishonest or lazy worker would be unwilling to accept employment under a contract like this. Even though the lifetime value of wages might be high under the contract, wages in the early years are lower than could be obtained elsewhere, and a dishonest worker would have reason to fear being caught and fired before becoming eligible for premium pay. By contrast, honest workers could accept work under the same contract and feel secure that they would maintain their positions long enough to reap the delayed bonuses. Firms, for their part, know that failure to maintain a reputation for honouring the contract would jeopardise their ability to recruit new workers. (Companies who have strong track records of honouring promises will eventually have advantage in getting quality new workers. Similarly, compensation schemes for employees should be tailored towards rewards in the long-term where the total package will definitely be better than short-term benefits. Such compensation scheme will weed out any potential  "dishonest" worker)

7) A discount hurdle is effective from the seller's point of view if potential buyers who are highly price sensitive (and probably would not purchase the product without the discount) find the hurdle easy to jump, while others who are not sensitive to price find it hard or simply not worth their while. (For me, the central message of discount hurdle is that we must be price sensitive in order not to be taken advantage by retailers, i.e. we are paying a higher price for the retailer's extra profit. This is why retailers will try to discourage consumers from being price sensitive by protraying price sensitive consumers as cheap, lack of class, etc. so that they can take advantage of us. Think about it! For me, there is no harm to compare prices and to ask for discounts and we can certainly do it in a classy manner without looking cheap)

8) .......as careful investors eventually learn, a buy recommendation conveys little useful information about a stock's future price.

9) Experiments suggest that, in at least some settings, a nurturing managerial style is more likely to elicit good performance from employees than a highly critical style. Such evidence may be more reliable than casual impressions biased by regression to the mean. (Anyway, times have certainly changed. Don't think the critical style of managing works for the current generation of workers will work)

10) According to Kahneman and Tversky, people use heuristics, or crude rule-of-thumb reasoning, to make estimates about events in the world. For example, when people try to estimate the frequency of a given event, they often use the availability heuristic, which holds that an event is more frequent if examples of it are easier to remember. (In simple terms, easy to remember examples is very effective in communicating a point)

11) Why do estate agents often show clients two nearly identical houses, even though one is both cheaper and in better condition that the other? (For this question, I will rewrite the entire text from the book here because I find the lessons learnt is very useful especially for sales people)

A home buyer is having trouble making up his mind between two houses. One is an Edwardian farmhouse in impeccable condition listed at 300,000 pound, the other a recently updated Victorian townhouse listed at 280,000 pound. He is leaning towards the Victorian townhouse. His estate agent then makes an appointment for him to see a second Edwardian farmhouse. This one is in slightly worse condition than the first and is listed at 320,000 pound. As the two are driving back from his visit, the home buyer announces his intention to buy the first Edwardian farmhouse. What led the estate agent to think it would be a good idea to show him the second one?

This episode evokes the story of a man who asks the waitress in a cafe what kinds of sandwiches are on the menu. 'We have chicken salad and roast beef', replies the waitress, whereupon the diner orders roast beef. The waitress then adds, 'I forgot, we also have tuna,' to which the diner responds, 'In that case, I'll have chicken salad.'

By switching his order, the diner has violated a fundamental axiom of rational choice theory, which is that adding an inferior element to a list of options should not alter the option chosen. The diner's initial choice implied a preference for roast beef over chicken salad, a preference that should not have been altered by the addition ot tuna to the list of options.

As Itamar Simonson and Amos Tversky have shown, however, such preference reversals are actually common. What seems to be going on is that people often have trouble choosing between two options that are difficult to compare. Each has attractive attributes, and people are reluctant to choose one for fear that they may later regret not taking the other. In such situations, Simonson and Tversky argue, the introduction of a seemingly irrelevant new option can have a profound effect.

The estate agent's client could not choose between the first Edwardian farmhouse and the Victorian townhouse. But he experienced no such anxiety when comparing the first farmhouse with the second, because the second was inferior in both quality and price. The first farmhouse's easy victory in this comparison creates a halo effect that carries over to the comparison with the Victorian townhouse.

(Get the central message? It is always useful to guide potential client in making their decisions ;) I am sure we can relate to all of this. I would think that this also applies to SALE strategy used by a lot of retailers. When they show the consumer how much they save during a SALE, the consumer can make easier decision, i.e. to buy it during the SALE event eventhough they may realise later, that they don't need that item).

12) By planting the thought that others are spending millions, Victoria's Secret makes the idea of spending several hunderd dollars seem less preposterous. It is easy to imagine that an eager husband, having just seen the 6.5million Fantasy Bra, might hand over 298 dollar for the company's Chantal Thomas Pinstripe Merrywidow and think what a sensible shopper he'd been. (Same with previous point's concept. This is how marketing has manage to push the limits for what can be defined as sensible. For instance, it would be extravagant to consider travelling overseas yearly or twice yearly a few years back but with the introduction of low-cost airlines, it appears sensible now to do so eventhough at the end of the day, you still need to spend considerable sum for travelling, lodgings, food, etc. The same goes with owning the latest smart phone. A few years back, it would seem crazy to spend such a large amount of money on a handphone but now, it is a norm. The point is, can we wise up to the marketing tactics used by retailers and we wonder why the gap between the rich and poor is getting wider)

13) ...... employees performing a given task earn higher salaries when they work for more prosperous employers. (This is obvious isn't it? For example, a struggling firm paying minimum wage for a security guard can be accepted by the public but if for example, Petronas paying minimum wage to the poor security guard, it may be seen as exploiting by the public since the public have the perception that they have already made so much money and can certainly afford to pay a little bit more to the poor security guard who has a tough time making ends meet. Another obvious reason is of course, prosperous employers have the mean to do so - duh!)

14) ...... the best gifts are often things we're reluctant to buy for ourselves. (Companies planning for rewards scheme would do no harm by remembering this point. Remember, we humans are not rational).

15) ...... the more unpleasant and risky a job is, the more it pays. (This holds true from a strict economic perspective but am afraid I don't agree entirely with this statement. Sometimes, people may get exploited and ends up getting less than what he deserves. Again, this is a fine balance, one cannot be too calculative and expect instant reward but at the same time, should be smart enough to realise he is cheated and move on. Anyway, in my opinion, the risk of going wrong is smaller if you work hard rather than hoping for quick gain).

This book is certainly recommended especially for technical people to be more attuned to the real world. We must remember that the world certainly do not work based on strict protocols or standards which technical people are accustomed to in their world. Happy reading and have a nice weekend.

p.s. World financial markets appear poised for another turbulent period. At this moment of uncertainties, it is important that we stick to our principles (I mean good principles) and eventually, such event are for the better as it will weed out the good from the bad. Companies caught in recession would do well to strengthen their core competencies to take advantage of the eventual recovery.

The Undercover Economist

For engineers or other technical profession, we are often labelled as poor managers or are out of tune with the real world. This is true because most of the time technical people are so engrossed in their areas of expertise that they view other knowledge especially social science, economics, etc. as the lesser knowledge and couldn't be bothered about it. In time, they will be living in their own world and they usually ignore the rest of the world and couldn't care less about what others think. In my opinion, to be a good manager (especially people manager), one have be in-tune with people, knowing about their feelings, their fear, their wants, etc., i.e. to be in touch with the human side. Therefore, I have also included books on economics as part of my reading list outside of technical subjects (hey, technical subjects cannot be ignored as it is my core expertise - remember management lessons about not ignoring one's core expertise?). For an easy read especially for someone without formal training in economics, the series of book by Tim Harford is recommended. Tim Harford's books on economics are written in such simple language that it will make anyone appreciate economics and how it affects our decisions. For my review on books by Tim Harford, I will start with "The Undercover Economist" which changed my perception on economics and how I look at the world.

As usual, I will summarise some key points/concepts which I gathered from the book and hope that you will find it as insightful as I am:

1) On coffee bars - The willingness to pay top whack for convenient sets the high rent, and not the other way around. (Usually, we thought that it is because the high rent which results in expensive coffee but it is not.)

2) In the United Kingdom, teachers' wages are low in spite of the fact that there is a shortage of qualified teachers. This is because the government, the single employer, has massive bargaining power. Ordinarily, when there is shortage of workers, competition between employers would bid up wages. Only a monopoly employer could possibly maintain a situation where there is serious shortfall of teachers but salaries does not rise to respond. The teachers have some strength from scarcity, but in this case the government has more. (This drives an important point. It is all about supply and demand but eventually, it depends who holds the cards in the bargaining table).

3) It did not matter whether the economy was changing, because the economy will never change so much that companies with no scarcity power become highly profitable. (Companies or perhaps individuals have to constantly ask themselves what is their scarcity power. Is what they are doing easily copied by others? If the answer is yes, it is likely that the business cannot remain profitable in the long run. This is because competitors will emerge which will provide the same services and this will results in price competition. This is why it is so important for companies to have strong culture and innovation to stay ahead of competition. The same applies to individuals!)

4) .......remember that long-lasting profitability for a company comes from having some capability that others cannot match: a powerful brand in a conservative market - think of Durex condoms; control of a standard like Microsoft's; or simple superior expertise, like General Electric. (Have you think of what is your company's capability that others cannot match? Unique products that cannot be easily replicated, e.g. Apple? Strong technical expertise via strong human resource development culture or system? Have you put in measures to ensure this competitive edge is maintained in the future? For example, a company may start out with great leaders and technical expertise and thus giving them competitive edge but are they able to produce equal or better leaders to lead the company in the future? I guess a company is similar to an empire or kingdom. If the next king is as strong as the founder, the empire will flourish but if the next generation is too comfortable, the empire will surely crumbles.)

5) Economists specialising in game theory argued that the allocation of public assets, from the right to drill oil to the right to use radio spectrum, ought to be determined by methods similar to those that determine a game of poker. In order to sift out competing companies' cheap talk and empty promises, the government had to impose high stakes and, to use an old phrase, force each negotiator to 'put his money where his mouth is'. (Similar in life, cheap talk and empty promises are easy. To test whether a person is genuine or not, we need to force the person to 'put his money where his mouth is')

6) In addition to the central claim that auctions really do raise more cash, the paper finally focused the attention of auction theorists on what should have been obvious; if you want a successful auction, you need plenty of serious bidders. (This is quite obvious isn't it. For example, some governments may tender out highly profitable government rights or public projects but as informed public, we should scrutinise the list of tenderers to see whether there are enough serious bidders in the tender)

7) Comparative advantage is the foundation of the way economists think about trade. (Tim Harford gives very good explanation on the concept of comparative advantage in the book but in very simple terms, it simply means we should always do what we do best! Again, this seems like a recurring theme in the books which I have reviewed so far. Companies and individuals should always do what they do best, i.e. stick to their core and it has been proven that it makes sense economically)

The summaries which I have provided here are rather short compared to some of my earlier postings simply because most of the insights from the book cannot be summarised in a few sentences. It requires the reader to read through the book (which is very easy to read) and to understand the concept presented through the many examples and stories in the book.

Managing Through a Downturn

Managing Through a Downturn is definitely the toughest task a manager/leader has to undertake. Of course, when the economy is buoyant, we are also faced with challenges such as keeping the best talent from rivals, managing multiple deadlines, etc. However, with a limited budget coupled with gloomy outlook, the task is definitely much tougher. The title of this book which is part of Harvard Business Review's series on management caught my eye and I was hoping that it would give me some insights on managing in such tough situation. This is the first book from Harvard Business Review which I have ever read and the book consists of seven articles from authors from diverse background ranging from Professors, Consultants and also CEOs. So, it should be worth our time right?

Some useful insigths from the book are summarised below:

1) "More than education, more than experience, more than training, a person's level of resilience will determine who succeeds and who fails" (The book starts on resilience which is an important characteristic if a company were to survive through a downturn. A downturn will present opportunities to resilient companies as it will weed out other weaker competitors and when the economy recovers, it is the resilient companies that stand to benefit)

2) Three fundamental characteristics seem to set resilient people and companies apart from others. One or two of these qualities make it possible to bounce back from hardship, but true resilience requires all three.

a) The first characteristic is the capacity to accept and face down reality. In looking hard at reality, we prepare ourselves to act in ways that allow us to endure and survive hardships: We train ourselves how to survive before we ever have to do so.

b) Second, resilient people and organizations possess an ability to find meaning in some aspects of life. And values are just as important as meaning; value systems at resilient companies change very little over the long haul and are used as scaffolding in times of trouble.

c) The third building block of resilience is the ability to improvise. Within an arena of personal capabilities or company rules, the ability to solve problems without the usual or obvious tools is a great strength.

3) ...... resilient people have very sober and down-to-earth views of those parts of reality that matter for survival.

4) The fact is, when we truly stare down reality, we prepare ourselves to act in ways that allow us to endure and survive extraordinary hardship. We train ourselves how to survive before the fact. (The ability to stare down reality is in some ways related to managing expectations. I believe a company should know the harsh reality of competition and that it is a jungle out there. You have to be the best or otherwise, competition will eats you up. At the end of the day, it is all about supply and demand. Again, it is a balancing act. Too much of doomsday scenario will sap morale. One way for a company is to set certain criteria for reward. For example, minimum percentage of bonus based on a target of how much profit a company made for the year and also how much staff contributed to that profit. That way, staff would know what to expect and also what is expected of them in order to get that desired bonus. If we leave it to staff imagination, it may overshoot or undershoot catastrophically. For Malaysians, the closest example that I can think of is our public university admission. People are frustrated because it seems that even the brightest student can't earn a place in our university for his choice of studies. If the selection criteria is transparent, the frustration can be managed as the students' expectations can be managed and for all we know, it may be simply there are better students out there and all these conspiracy theories are only our own imagination. Hahaha! Similarly, maybe there are conspiracies by the management to squeeze staff dry or maybe it is only our imagination. Hahaha!)

5) ..... resilient people devise constructs about their suffering to create some sort of meaning for themselves and others.

6) Since finding meaning in one's environment is such an important aspect of resilience, it should come as no surprise that the most successful organizations and people possess strong value systems.

7) Values, positive or negative, are actually more important for organizational resilience than having resilient people on the payroll.

8) The third building block of resilience is the ability to make do with whatever is at hand.

9) ..... rules  and regulations that make some companies appear less creative may actually make them more resilient in times of real turbulence.

10) Resilient people and companies face reality with staunchness, make meaning of hardship instead of crying out in despair, and improvise solutions from thin air. Others do not.

11) (On smart executives): they prepare for the worst while focusing their companies on what they do best.

12) Failing to plan for the worst is a much bigger mistake than upsetting the troops in the short term, because once an industry is in the middle of a downturn, it is almost impossible for companies to come up with inventive solutions (Good point right? Just spare some time during good times to plan for not-so-good time which every company will have to go through inevitably)

13) Successful downturn managers avoid diversification and concentrate as many resources as possible on playing to win on their main field of competition (It needs clarity of mind for a manager to know his own strength and not be confused by other distractions. Studying history, all empires eventually fall because of either the rulers or their successors have become too comfortable on their own success or their ego has become too inflated that they think that they can conquer the whole world)

14) Far better to plan ahead and stay focused on what you know you can do, not on what you hope to do better than established players in other markets.

15) Costs do have to be carefully managed, but the key is consistency. A company shouldn't act one way in good times and another way in bad times. Otherwise, employees, suppliers, and other business partners will lose confidence in the company, and morale, cooperation, and productivity will all decline.

16) Companies such as Southwest Airlines, Harley-Davidson, and FedEx have no-layoff policies. As a result, their employees dig in during tough times rather than shop for new jobs. (I feel this is the right approach. Companies expect committed employees, so companies should be committed to their employees as well. Besides, anybody who has ever gone through the painful experience of being laid off or withnessed their colleagues being laid off knew how demoralising that can be. Again, there is a caveat. You also do not want to create a too comfortable environment like public service and ends up with a lot of dead woods).

17) Companies that successfully navigate huge waves tend to look bad news in the eye and institutionalize an approach to detecting storms. Rather than hedge their bets through diversification, they place a big bet on their core businesses and spend to gain market share. They manage costs relentlessly during good times and bad. They maintain a long-term view and strive to earn the loyalty of employees, suppliers, and customers. Coming out of the downturn, they maintain momentum in their businesses to stay ahead of the competition they've already surpassed.

18) (On root causes of growth stalling): Nearly half of all root causes fall into one of four categories: premium-position captivity, innovation management breakdown, premature core abandonment, and talent bench shortfall.

19) Premium-position captivity: the inability of a firm to respond effectively to new, low-cost competitive challenges or to a significant shift in customer valuation of product features (A company needs to constantly review its work processes and whether it has grown to be inefficient and not only resorts to restructuring when there are serious problems).

20) Innovation management breakdown: some chronic problem in managing the internal business processes for updating existing products and services and creating new ones.

21) Talent bench shortfall: a lack of leaders and staff with skills and capabilities required for strategy execution.

22) Internal skill gaps are often self-inflicted wounds, the unintended consequence of promote-from-within policies that have been too strictly applied. Such policies, often most fervent in organizations with strong cultures, can accelerate growth in the heady early days of executing a successful business model. But when the external environment presents novel challenges, or competition intensifies, these policies may be a severe drag on progress.

23) Few companies formally monitor the balance in the executive team between company lifers and newer hires who offer fresh perspectives and approaches.

24) And management development programs all too often focus on replicating the skill sets of the current leadership, rather than on developing the novel skills and perspectives that tomorrow's leaders will need to overcome evolving challenges.

25) ..... analysis of company growth rates and senior leaders' backgrounds suggests that the sweet spot for external talent is somewhere between 10% and 30% of senior management (This is a good target for company CEOs. In addition, CEOs and also EMPLOYEES should remember points 21 to 25. CEOs have important responsibility of communicating this point to employees so that existing employees are not over-zealous in protecting their beloved company. Future leaders from within the company should have enough confidence to accept outsiders who brings value to their organization. Management should also inculcate a culture where it is easier for an outsiders who brings quality to fit in to the organization rather than being isolated and eventually forced to leave).

26) Organizational pathologies - secrecy, blame, isolation, avoidance, passivity, and feelings of helplessness - arise during a difficult time for the company and reinforce one another in such a way that the company enters a kind of death spiral. Reversing that downward trend requires deliberate efforts by the CEO to address each of the pathologies.

27) ...... the first task of turnaround leaders is to open channels of communication - starting at the top.

28) Turnaround leaders must move people toward respect; when colleagues respect one another's abilities, they are more likely to collaborate in shaping a better future.

29) To pull a company out of a death spiral, the CEO needs to encourage people to take initiative and feel that they can make a difference - which is hard to achieve when an organization is in slash-and-burn mode. (In my opinion, this is one of the most challenging task of a CEO. Well, CEOs are highly paid to do the difficult task anyway. My point is that the CEO must be convincing and sincere and it is even more important that the employees believe him/her. It is very difficult to gauge the actual response as most of the time employees may just nod in agreement but actually doesn't buy the idea. For me, in an ideal world, the CEO should be in the front line fighting with his soldiers and earn their trust and respect - just like in war movies).

30) ...... strategy goes nowhere unless it begins with the customer.

31) Leadership economics is a hallmark of almost every great strategy; when we see a situation in which the rich get richer, this is the phenomenon at work. (This statement means that in whatever a company (or an individual) does, the aim should always be towards No. 1. Whether as the No. 1 firm in your industry, the top gangster, etc. - to be No. 1 is the ultimate aim as the rewards will be disproportionately higher between the No. 1 and the rest).

32) Three archetypes of leadership:

a) Entrepreneurs are often ahead of their time, not necessarily bound by the context in which they live. They frequently overcome seemingly insurmountable obstacles and challenges to persevere in finding or launching something new.

b) Managers are skilled at reading and exploiting the context of their times. Through a deep understanding of the landscape in which they operate, they shape and grow businesses.

c) Leaders confront change and identify latent potential in businesses that others consider stagnant, mature, declining, or moribund. Where some see failure and demise, this breed of executive sees kernels of possibility and hope.

(Does your company have each of the above leaders?)

33) Eric Schmidt: A company can survive losing a lot of people, but if it loses its smart people, it's done for. (Do you know who is the smart people in your company?)

34) Eric Schmidt (on keeping employees): ..... you need some kind of early warning system so that you always have a chance to get to people before they're out the door.

35) To win the hearts and minds of your key employees, you have to communicate directly and physically with them.

To be honest, after finishing the book, my initial thought was that this book is only average. But after writing down some of the key insights, I found that I actually did learn something from it. You won't feel like you are ready to take on the world after reading this book but I guess it is probably got to do with the title and not the quality of the articles. This serves as a good lesson to me. I should train myself to be exposed to less encouraging subjects and get wider perspective. For example, you will notice books on people's success are usually more popular. While, it is good to stay positive but we must avoid getting the wrong true picture of achieving success, i.e. IT NEEDS A LOT OF HARD WORK!

Napoleon by Max Gallo

Lessons and strategies from military exploits provide the best reference for us to translate into daily management and strategies in our business and work. In military, great leaders are able to motivate people to fight for a cause (and the causes are not necessary clear or just) and when compared to our day-to-day work, our challenges would appear like child's play. For one, our failures would not involve massive loss of lives (including our own) or if you are lucky, ends up being a POW. As such, I would recommend reading military books and the lessons from such books would be invaluable in our quest to be a good leader. This is why classical military texts such as Sun Tzu's Art of War or Clausewitz's On War are part of management and strategy courses being taught in good universities.

One of my favourite military strategists of all time is Napoleon and of course, many of us knew about his exploits and achievements in modern warfare and strategies. In my opinion, Napoleon's victories are unmatched and perhaps will never be matched. His achievements are even more amazing given the fact that he often out-maneuvered his adversaries who are usually superior in numbers. For those who are interested in the exploits of Napoleon, I would recommend the novel by Max Gallo as a starting point. Please take note however, that the book by Max Gallo is a combination of history and fiction. Because of Max Gallo's brilliant imagination, the quartet of books is highly readable and therefore, is a good start before we read more serious and "dry" military books.

The series are divided into four books as follows:
a) The Song of Departure
b) The Sun of Austerlitz
c) The Emperor of Kings
d) The Immortal of St Helena

There are many lessons which we can learn from Napoleon's amazing achievements and his subsequent downfall:

1) In war, as in politics, one must fight one's adversaries by uncovering their intentions, letting them reveal themselves as one feigns weakness or ignorance, and then strike at the desired moment.

2) One must always, when one cannot crush an enemy completely, leave him the possibility of fleeing and saving face, so that instead of being compelled to fight to the death, he agrees to negotiate. (This message is standard in all military texts and good leaders should remember this. Very often, our ego gets in the way and we ended up fighting long wars which drains our energies and resources. For me, I always remind myself on the "real" objective of doing something. In fact, Napoleon's own downfall is due to his protracted campaign against the Russians (so are the Germans) which ultimately results in his defeat at Waterloo).

Reading about Napoleon's campaigns, one will learn the importance of surrounding yourself with good leaders (or managers). Napoleon's army is famous throughout Europe because he picks good leaders such as Lannes, Ney, etc. Napoleon's strategies also involve quick movement of his military units and often surprises his enemies from the back and again, it is important in our day-to-day management to make quick and decisive decisions.

For this series of books, I will limit the list of useful lessons but rather, will encourage those interested in Napoleon to "enjoy" reading his spectacular rise and subsequent painful downfall. To compensate for the reduced content in this post, I will include some useful military quotes for your reading pleasure:

1) Leadership is the art of getting someone to do something you want done because he wants to do it - Dwight D. Eisenhower.

2) There are only four types of officer. First, there are the lazy, stupid ones. Leave them alone, they do no harm......Second, there are the hard working intelligent ones. They make excellent staff officers, ensuring that every detail is properly considered. Third, there are the hard working, stupid ones. These people are a menace and must be fired at once. They create irrelevant work for everybody. Finally, there are the intelligent lazy ones. They are suited for the highest office. (Personal opinion: Careful on interpretation and don't ends up filling your company with lazy people.)
- General Von Manstein on the German Officer Corps

In summary, reading military books is great for budding leaders but for me, it is important that we get the right lessons. When I was younger, I refused to read books which teach us to achieve our objectives at all costs or where the ugly side of human being are emphasised for fear that I would turn into a person with all the material riches in the world but with no real friends or families. For that I leave you with a quote which I extracted from Sun Tzu's The Art of War which was translated by Lionel Giles and with a new foreword by John Minford:

"Emerge from the mud untainted; understand cunning but do not use it" - A Ming-dynasty writer.

From Asian to Global Financial Crisis: An Asian Regulator's View of Unfettered Finance in the 1990s and 2000s

When I choose a particular book to read, I usually make sure the Author really knows his subject. For example, I try to pick books written by Warren Buffet himself rather than someone who is interpreting his thoughts. Similarly, the last few books which I have posted are something like autobiography. Therefore, when I was interested to read about the Asian financial crisis and how it relates to the crisis of 2007/2008, I was hoping to read the experience of someone in the eye of the storm rather than some academics or critics who may not understand the uniqueness of Asians. I believe we are always biased by our upbringing, education background, families, friends, etc. As such, I was very happy when Andrew Sheng decided to write about the Asian financial crisis. Andrew Sheng is the ideal candidate to write about it given his experience in Hong Kong, China and Malaysia and the book will be handy as a source of reference and also to remind us not to keep repeating history itself.

Some of the key points which I gathered from the book are briefly summarised below:

1) Ultimate test of economic success is not natural resource endowment or geography, but the quality of governance (The turmoil experienced in some of the richest natural resource countries such as the middle east highlights this point. In fact, there is a term for such a situation, the resource curse).

2) The stronger the yen, the more Japan would transfer production to its cheaper neighbours and lend or invest in the region to prevent further yen appreciation. The more liquidity and investment inflows, the more the Asian economies boomed, because they were on a 'soft peg' to the U.S. dollar. On the other hand, the reverse situation would occur if the yen were to depreciate.

3) The Japanese asset bubbles were identical to other asset bubbles in the sense that they were essentially inflated by credit. (This is an important lesson. Bottomline is, whenever, there is easy money, there will be bubbles. In layman's term, if we start hearing mega projects or billion dollar seems like spare change, it means that there is easy money everywhere. You think it is easy to finance billion dollar projects if there is no easy money?)

4) ........potential volatility due to sudden swings in the reversal of the carry trade would remain one of the key vulnerabilities of the Asian global supply chain.

5) ......beam in our eyes, seeing what we choose to see or what we are trained to see, and we may ignore the most important details. (One of our major weaknesses. I would recommend mixing with people of different background and perspective in order to reduce the effect of "beam in our eyes").

6) 'Never let monkeys look after bananas'

7) The other problem with modern education and technical training is that we have created silos of specialists, each arguing with each other from their own specialization and narrow points of view.

8) The Asian crises followed the topography of a Minsky-Kindleberger model of financial crisis that goes through roughly five stages - displacement, monetary expansion, overtrading, revulsion and discredit.

9) The irony is that at or near the top of the boom, irrational exuberance and greed are such that hardly anyone questions Ponzi financing behaviour when it emerges.

10) ......loose monetary policies, excessive global liquidity and low interest rates create bubble conditions. (I have highlighted in a few previous postings that I believe Malaysia is currently experiencing a property bubble. We certainly have the ingredients where banks are aggressively marketing housing loans coupled with low interest rates two years ago. But now, we are seeing a steady rise of interest rates and the next stage will see the euphoria slowing down before a painful plunge. Well, that is my opinion)

11) The Thai explanation of the crisis may be centred on two broad areas - excessive private sector debt and mistaken policy decisions, the former somewhat encouraged by the latter.

12) In a financial panic the central bank must lend freely at penalty interest rates against good collateral. But the central bank cannot exercise the role of lending freely during a currency attack, particularly in trying to defend a fixed exchange rate. In a situation of open capital flows, the only defence of a fixed exchange rate is through higher interest rates. However, if the corporate sector is already overleveraged and the banking system fragile, then raising interest rates is in fact no defence. Higher interst rates would only worsen the financial position of the corporate sector and the banking system, leading also to bank runs.

13) .......central bank cannot defend both a currency attack and a bank panic at the same time.

14) Clean politics is wise politics.

15) To avert a crisis, monetary policy must strike a correct balance between these three elements [exchange rate regime, domestic interest rates and the control of capital flows into and out of a country]. (Easier said than done. One of the biggest obstacles for regulators is the interference of politics. As we know, once politics interfere, whether it is in public governance, education or finance, the results are usually disastrous).

16) Pride comes before a fall.

17) For nations to grow stably, their industrial base must be supported by a sophisticated financial system with good risk management and strong governance.

18) Amongst investors familiar with Asian markets, two important indicators point to irrational exuberance. The first is the amah (domestic maid) syndrome. When amahs get into the market, that is the time to get out.

19) The second systemic indicator is when businessmen begin to neglect their businesses and begin to punt heavily in the market.

20) Tan Sri Noordin: "During a crisis, don't deal with all problems. Deal only with the top three".

21) Walter Bagehot's dictum states that in a banking crisis the central bank must lend freely against good collateral.

22) China's rapid growth in the last 25 years is a demographic endowment, with a large increase in the working age population. (Can this last forever? Refers to China's working age population chart below).

23) If their (China) nominal exchange rate remains unchanged, then there will be a danger of asset bubbles forming in the stock and real estate markets.

24) .........from historical experience that all crises are inevitable - it is a matter of when and how serious. (My personal opinion is that an asset bubble crisis would hit Asian countries soon starting from China).

25) A fundamental problem with the world of financial derivatives is that neither regulators nor market participants have a good handle on how much true leverage exists in the system and consequently how much capital is necessary. The embedded leverage in many derivative products magnified the impact on market volatility.

26) Keynes: 'A conventional valuation which is established as the outcome of the mass psychology of a large number of ignorant individuals is liable to change violently as the result of a sudden fluctuation of opinion due to factors which do not really make much difference to the prospective yield; since there will be no strong roots of conviction to hold it steady'.

27) Minsky's Financial Instability Hypothesis holds that over a run of good times the financial structure evolves from being robust to being fragile.

28) The fallacy of composition, by which market participants erroneously assume that what they believe is true based on partial information is true for the market as a whole, was prevalent in both the Asian and current crises. Market participants acted on partial information, and their collective herd behaviour created market overshooting or undershooting.

29) Military strategists appreciate that ground conditions are continually changing and that strategic resources cannot be stretched too thinly. For best effect, they must be concentrated and used against a chosen sector with the greatest effect. They remember all too clearly that it is most dangerous when all is quiet on the Western Front. Likewise, financial regulators have to learn to recognize that dangerously low-risk spreads and low volatilities, coupled with fast-rising markets, are usually precursors to crisis.

30) A routine execution of current processes without examining outcomes is likely to lead to process for process' sake.

31) ......no financial structure is strong unless the real economy is strong.

32) .......crisis is ultimately political in nature.

33) Ultimately, all financial crises are crisis of governance.

In summary, this book is a good source of reference for an overview of the Asian Financial Crisis and how it relates to the 2007/2008 global financial crisis. Andrew Sheng's in-depth knowledge of Asian financial system has enabled him to analyse each countries' weaknesses from South Korea to Malaysia.

Here, to support my opinion that Malaysia and China is on the verge of another crisis which will be triggered by collapse of the property sector, I would like to offer my two-cents worth of opinion. First, I would like to draw the readers' attention to the first figure below:

From the figure above which was sourced from the National Property Information Centre (NAPIC), it shows that the total value of property transactions in Malaysia reached a record of RM107.44 billion in 2010. From the chart above, doesn't it look like it is due for a correction sometimes in 2012?

The next figure is on the working-age population (ages between 15 and 64) as a percentage of total population which was shown by Andrew Sheng in his book. What I find interesting is the good correlation between Japan's stock market reaching its peak on Dec. 1989 and the subsequent property collapse with the decline of Japan's working-age population. Based on UN's projections, will we see similar problems with China soon? Looks like 2012 may be an important year but I certainly hope it is not apocalypse. How about Malaysia? Looks like 2020 is a very important year for Malaysia after all.

Have a good weekend and for those celebrating Duanwu festival, enjoy your dumplings!

The 21 Irrefutable Laws of Leadership

Due to hectic work schedule, I have selected a relatively easier to read book for this period. John C. Maxwell's series of books on leadership and motivation is quite famous and I treat the book like a reminder. A reminder to do good things. A reminder to motivate people around me. A reminder to treat myself (especially my mind and body) good. Most of the time, the lessons in motivational books are common sense but we just keep forgetting it. That is my approach to reading motivational books, i.e. not too serious and treat it like watching tv or listening to music.

Some good points from the book which I try to remember and practise daily:

1) Your leadership ability - for better or for worse - always determine your effectiveness and the potential impact of your organization.

2) The higher you want to climb, the more you need leadership.

3) Whatever you will accomplish is restricted by your ability to lead others. (A few years ago, an Architect was complaining to me that being an architect is difficult as you will need people to perform for you in order for a project to be successful and he would not recommend his son to be an architect or any other jobs where you cannot work alone. He cites profession such as doctor or IT as the preferred profession as you will be less reliant or others. At about the same time, I also met a businessman. He told me that in order to be successful, you need to motivates people to perform for you. And the more people works for you, the better it is. Can you guess who is the more successful of the two?)

4) And if you don't have influence, you will never be able to lead others.

5) Leadership is influence - nothing more, nothing less.

6) It's not the position that makes the leader; it's the leader that makes the position. (I try to remind myself this everytime I work in a team. If people don't listen to my suggestions, it simply means I have to try harder to convince them and also do more homework in order to make sure the idea is a good one. You cannot force people to accept your views because of your seniority)

7) If your hope is to make a fortune in a day, you're not going to be successful. (Perseverance is the key. I know I know, it's cliche but then how many really have the stamina and determination to last the distance. Celebrate small wins and as long you make small progress everyday, it is still progress)

8) Benjamin Disraeli, former British prime minister, wisely commented, "To be conscious that you are ignorant of the facts is a great step to knowledge."

9) To become an excellent leader, you need to work on it every day. (More hard work ahead)

10) When he was twelve, young Roosevelt's father told him, "You have the mind, but you have not the body, and without the help of the body the mind cannot go as far as it should. You should make the body."

11) Former General Electric chairman Jack Welch asserts, "A good leader remains focused.....Controlling your direction is better than being controlled by it." (Are you shaping your own destiny or you let others shape your destiny?)

12) "A leader is one who sees more than others see, who sees farther than others see, and who sees before others do." - Leroy Eims

13) ..........if you fail to learn from your mistakes, you're going to fail again and again. (I usually tells myself and my teammates that it is ok to make mistakes as long as you don't repeat it again)

14) No matter how good a leader you are, you yourself will not have all the answers.

15) When you prepare well, you convey confidence and trust to people.

16) If you can't give credit (and take blame), you will drown in your inability to inspire.

17) .......leaders add value by serving others.

18) Are you making things better for the people who follow you? (Important to differentiate with exploiting people)

19) You must give some time to your fellow man. For remember, you don't live in a world all your own. Your brothers are here too.

20) Truly value others.

21) Leaders who add value by serving believe in their people before their people believe in them and serve others before they are served.

22) Make ourselves more valuable to others.

23) Know and relate to what others value.

24) ......mature leaders listen, learn, and then lead.

25) ......attitude of the leader affects the atmosphere of the office. (Have you ever wondered what kind of atmosphere you generate in the office? Positive, negative or invisible?)

26) Trust is the foundation of leadership. 

27) People will tolerate honest mistakes, but if you violate their trust you will find it very difficult to ever regain their confidence.

28) How do leaders earn respect? By making sound decisions, by admitting their mistakes, and by putting what's best for their followers and the organization ahead of their personal agendas.

29) Don't play politics, role play, or pretend to be anything you're not. To strengthen your discipline, do the right things every day regardless of how you feel.

30) .......people naturally follow leaders stronger than themselves.

31) ......followers are attracted to people who are better leaders than themselves.

32) One of the greatest potential pitfalls for natural leaders is relying on talent alone.

33) One measure of leadership is the caliber of people who choose to follow you. The second thing you should do is to see how your people respond when you ask for commitment or change.

34) How you see the world around you is determined by who you are.

35) Believe it or not, who you attract is not determined by what you want. It's determined by who you are.

36) Law of Magnetism: who you are is who you attract.

37) If you want to attract better people, become the kind of person you desire to attract.

38) When it comes to working with people, the heart comes before the head.

39) For leaders to be effective, they need to connect with people.

40) You must know who you are and have confidence in yourself if you desire to connect with others.

41) I adapt to others; I don't expect them to adapt to me.

42) .....focus on others, not yourself.

43) French general Napoleon Bonaparte said, "Leaders are dealers in hope." That is so true. When you give people hope, you give them a future.

44) People don't care how much you know until they know how much you care.

45) "You can do what I cannot do. I can do what you cannot do. Together we can do great things" - Mother Theresa.

46) Seek for your inner circle people who help you improve.

47) President Roosevelt: "The best executive is the one who has sense enough to pick good men to do what he wants done, and the self-restraint enough to keep from meddling with them while they do it."

48) If you believe in others, they will believe in themselves. (Don't trust people blindly though!)

49) Enlarging others makes you larger.

50) ......vision without action achieves nothing. (In simple terms, daydreaming won't get you anywhere)

51) People buy into the leader first, then the leader's vision.

52) Every message that people receive is filtered through the messenger who delivers it.

53) Every organization requires diverse talents to succeed.

54) Pareto Principle. (Also known as the 80/20 principle - refer to my earlier posting on the book 80/20 Individual).

55) If I'm doing something that's not necessary, I should eliminate it. If I'm doing something that's necessary but not required of me personally, I need to delegate it.

56) .......greatest success comes only when you focus your people on what really matters.

57) The heart of good leadership is sacrifice.

58) .....greatest mistake made by entrepreneurs and other people in business is not knowing when to cut their losses or when to increase their investment to maximise their gains. (The story of "Who moved my cheese" strikes a chord in demonstrating how we do not know when to cut our losses and keep pining for false hopes)

59) Only the right action at the right time will bring success.

60) If you keep adding value to the leaders you lead, then they will be willing to stay with you. Do that long enough, and they may never want to leave.

61) As you work to build your organization, remember this:

- Personnel determine the potential of the organization.
- Relationships determine the morale of the organization.
- Structure determines the size of the organization.
- Vision determines the direction of the organization.
- Leadership determines the success of the organization.

I find the last few pointers simple but powerful. I have observed that my current organisation possesses most of the above traits (of course, there are plenty of rooms for improvement). However, attrition rates are increasing especially for the relatively younger engineers. It strikes me that while my Managing Director has successfully developed two great Directors and my two Directors have also managed to influence another team of Associates and Associate Directors. If the Senior Engineers who are working with me are leaving for greener pastures, part of the blame should be on me as I work with them more than the two Senior Directors, right?

My personal challenge would be to help younger colleagues to become better leaders and have a more meaningful life. I certainly hope to leave a legacy of helping others sincerely. Well, I hope the above review helps you towards meaningful leadership. Good luck.

Doing Business or Working in Malaysia

For those who are not familiar with Malaysia, I guess one of the most important factors to be considered about doing business in Malaysia is about its multi-ethnicity. As such, there are bound to be differences between dealing with government linked companies which are predominantly managed by Malays. The other two main ethnic groups in West Malaysia are the Chinese who traditionally concentrates in areas such as retail and trading while Indians have significant presence in advisory services such as law and IT. For this first posting, I will offer some opinions on some business characteristics of companies run by Chinese since I am a Chinese in the first place. Again, there may be some differences of opinions given the fact that Chinese in Malaysia's education background can be either National language (Malay)-medium and Chinese-medium based. I happen to fall in the former category and as such, my views are influenced to a large degree to my education background:

Some characteristics of small and medium size Chinese-run companies:

1) Family-based business. Chinese usually put trusts in their family members and as such, you tend to see father handing over the business to his son/daughter and relatives filling up key positions in the company.

2) Titles are important. Very often, you will observe in business cards with long list of affiliations. Some may be offended if you don't address them with their conferred titles such as Datuk, Sir, etc.

3) Direct comments are usually not recommended. It will be perceived as lack of respect. It has to be done subtlely especially the comments are directed to someone who is older. The elders have to be respected and the terms "loss of face" in Chinese which means loss of respect is something you don't want to cause to the other party.

4) Hierarchy is important. This includes seating arrangements in official functions, lines of communications, etc.

5) Food is important. Guests are usually treated to fine Chinese dining.

6) Very hardworking. Typical of Asians anyway. Emphasis on work-life balance is usually less compared to Western counterparts. Office and private times are often blurred. Work related phone calls after office hours and weekends are normal.

7) Small gifts to guests are welcomed.

8) Major holidays are the Chinese New Year. Expect long breaks during this period and not during Christmas. Work on Chinese New Year eve is a big NO as most Chinese will spend the evening having reunion dinner with family members.

9) Mandarin is the most common language. Other common dialects include Hokkien, Cantonese and Hakka.

10) For business conversations, profanity is seldom used. For example, I have met an American who use the word "f**k" casually in his conversations even when he is not angry. Not common here unless you are dealing with blue collar workers.

Of course, the above are GENERAL observations. There are always exceptions and with the increasingly flat world, I guess the exceptions are increasingly becoming normal. Anyway, others may have their opinions and are welcome to give their comments.

The McKinsey Mind: Understanding and Implementing the Problem-Solving Tools and Management Techniques of the World's Top Strategic Consulting Firm

The word McKinsey is almost synonymous with strategic and business consulting as it has established itself as one of the most successful business consulting firm in the world. What differentiates it further is that anybody trained in the McKinsey way is usually much sought after in the corporate world and it's alumni heads some of the biggest corporations in the world. As such, naturally I was drawn to learn from them and see what makes them tick. This book written by Ethan M. Rasiel and Paul N. Friga provides some insight into the management techniques employed by McKinsey. What I find really useful is on knowledge management especially for consulting business. As we know, consulting company don't have much (if any) hard assets and their business revolves around knowledge. As such, without a proper knowledge management system, a consulting company cannot be sustainable which explains why many consulting company fades away after its founder retires or is no longer around. As such, for consulting company, knowledge management is everything and the acid test is whether the company can last after its founder retires. Even for non-consulting company, knowledge management is very important in order to be ahead of its competitors. For example, Wal-Mart prides itself as having the most efficient supply chain management in the world by utilising the knowledge it gathers from its customers and adjusting their inventory based on the knowledge gathered. Similarly, I am sure Google fine tunes its search engine by continuously managing the feedback (knowledge) from its users.

For an example which I am familiar with, let's take property developer for instance. A good property developer should have a knowledge management system which continuously document best practices and lessons learnt in order to provide the best for its customers. This way, better time can be spent on improving their products rather than focusing on minimising mistakes. For example, a database on the following would be most useful:

a) Typical cost per square foot associated with different development, e.g. high-rise, commercial, office, etc.
b) Things to avoid which will affect buyers' decision such as "feng shui", e.g. facing direction of units, location of bath rooms, etc.
c) Optimum structural system for different development and what is the criteria for selection.
d) Optimum foundation system for different development and location of the site.
e) Things to avoid/risks associated with different ground conditions, e.g. soft ground, hillside, coastal areas, limestone, etc.
f) "Wow" factors for buyers.
g) Checklist for its consultants on its expectations.

And the list goes on. In addition, knowledge management does not mean managing documents. It is about creating a culture where knowledge can be freely shared inside the organisation. However, it is important to realise that a too rigid system may harm the company as a company does not want its personnel just to follow checklists without doing their own thinking. As such, it is important to strike a balance between providing enough guidance without restricting the creative and innovative juices of one's personnel. Who says it is easy to build a successful organisation? Everything is about the right balance. Happy reading and learning!

The following are some of the exerpts from the book which I will refer back from time to time in order to improve myself:

1) McKinsey concept of MECE (Mutually Exclusive, Collectively Exhaustive) in the context of problem solving means separating your problem into distinct, nonoverlapping issues while making sure that no issues relevant to your problem have been overlooked.

2) In the generic approach to framing the problem, McKinsey-ites put this concept into practice by breaking the problem before them into its component elements. (In my opinion, this is an important traits of a good leader, i.e. the ability to break the problem into its component elements. When this is done, the problem appears less overwhelming and can be tackled one by one. The last thing you need is to be overwhelmed by the problem because it seems too daunting to be solved).

3) For your brainstorming sessions to succeed, you should follow these rules:

a) First, there are no bad ideas.
b) Second, there are no dumb questions.
c) Third, be prepared to "kill your babies" (i.e. to see your ideas get shot down, and to pull the trigger yourself if necessary).
d) Fourth, know when to say when: don't let brainstorming drag past the point of diminishing returns.
e) Last and most important, get it down on paper.

4) On decision making: sooner or later every executive has to make a major decision based on gut instinct (This may sound trivial but in my opinion, it is one of the most difficult trait to master in order to become a good leader. A person who is afraid or lack the insight to make decision based on gut instinct usually will be paralysed by the lack of information. In fact, the French has a term for this quality - coup d'oeil - an intellect that, even in the darkest hour, retains some glimmerings of the inner light which lead to truth. Again, don't misunderstand this with making decisions recklessly which is different!).

5) When doing your research, you don't want to get as much information as possible, you want to get the most important information as quickly as possible.

6) Do you make any arguments without supporting facts? If so, this is a red flag.

7) Seven tips for successful interviews:

a) Have the interviewee's boss set up the meeting.
b) Interview in pairs.
c) Listen, don't lead.
d) Paraphrase, paraphrase, paraphrase.
e) Use the indirect approach.
f) Don't ask for too much.
g) Adopt the Columbo tactic. This is based on a TV character in the 1970s, Lieutenant Columbo played by Peter Falk. He would often finish questioning a suspect and then pause by the door to ask one more question - usually a zinger. This tactic succeeded because the suspects often dropped their guard and allowed the truth to come out. You can try this approach if you think an interviewee is holding out on you.

8) Effective managers spend a majority of their time listening.

9) Data are facts, observations about occurrences, and numbers. Information is a collection and some synthesis of data. Knowledge is the mix of information, experience, and context in a value-adding process.

10) Knowledge Management (KM) is the systematic process by which an organization maximises the value of the uncodified and codified knowledge in the firm.

11) McKinsey maintains two primary database. One called PD-Net, includes previous reports generated and cleansed for sharing among the Firm's consultants. You could think of it as the "know what" database. The other database is a directory of all the Firm's experts in various industries and practice areas; call it the "know who" database.

12) On KM implementation efforts:

a) Develop a rapid-response culture.
b) Acquire external knowledge.
c) Control the quality of your input: garbage in, garbage out.

13) Remember than an organization can only do so much at one time. Concentrate on the big wins first. (An important trait of a good leader - the ability to prioritize).

14) You must make sure the solution fits your client.

15) ..........even if the particular analysis you are doing necessitates gigabyte-sized models and complex mathematics, try to simplify the results of that analysis to a level than an educated outsider can understand.

16) On the subject of buy-in, McKinsey alumni have one principle inscribed on their hearts: prewire everything.

17) One obvious lesson from McKinsey is that managing the team is a separate, distinct and important task. This is not widely appreciated in other organizations. (This sounds simple but many organizations fail to appreciate it. For example, a technical manager in an engineering consulting firm usually concentrates on managing technical solutions for the client with virtually negligible time spent on managing his team. Companies usually emphasize the importance of team without allocating sufficient time and resources to manage the team. IBM's structure is good in this respect where they make distinct differences between technical manager, people manager, subject matter expert, etc.)

18) On selecting and recruiting team members:

a) Consider not just demonstrated ability, but potential ability.
b) Appreciate the value of diversity.
c) Apply structure to recruiting efforts.

19) ........learning by walking around - random meetings to connect with team members outside of scheduled meetings.

20) Performance assessment should meet three criteria. It should be objective, be based on expectations that were set in advance, and account only for events that were within the control of the person you are mentoring.

21) It is important to point out weaknesses and development opportunities but to avoid going overboard and making every comment a "suggestion for improvement".  (Don't make performance review demoralizing with too many negative comments).

22) Rather than sticking a foot in the door and barging in cold, build up a reputation and let it preceed you. (McKinsey approach to indirect selling).

23) On client service:

a) Engage the client in the process.
b) Always look over your shoulder.
c) Keep the client team on your side.
d) Learn to deal with liability client team members.
e) Pluck the low-hanging fruit.
f) Get buy-in throughout the organization.

24) ........the locus of problem solving: it is best done in the "client's backyard".

25) ........before you head off to the next problem, present a clear implementation plan that includes exactly what should be done, by whom, and when. This applies not only to consulting projects but also to internal projects that hinge on future activities for eventual value generation.

26) If you view your job as a challenge to help clients win, rather than focusing on how you win, good things will happen. (Important to remember this point especially for consulting business).

27) You can't do everything, so don't try.

28) In a modern organization, you can't last very long as a one-man band.

In summary, this book provides principles which have served McKinsey well. At the end of the day, management is about getting the best out of your team members in order to solve client's problems. The techniques offered by the book would certainly help and for me, the book is useful as a reminder when you get overwhelmed by daily deadlines (aren't we all). So, as a final word, while it is important to manage your team, I guess the most important person to manage is yourself. Have a good and healthy life!