The Innovator’s Dilemma – Clayton M. Christensen

“The logical, competent decisions of management that are critical to the success of their companies are also the reasons why they lose their positions of leadership.” – The Innovator’s Dilemma

The Innovator’s Dilemma is simple. ‘Good’ companies, ones that maximize investment returns and listen to their customers, are harming their future prospects. Why? Because to stay on top, you need to innovate, but customers don’t want innovation: they want what they’ve always gotten. To innovate, you need to find new customers, try new things, take on risks, but ex-ante those risks can seem unreasonable or unwise.

The Innovator’s Dilemma argues that many business miss disruptive technologies. They do so not because they aren’t able to produce them, but because their current customers didn’t need or want the new product. When a smaller 5.5 inch hard drive was introduced, the major market for hard drives was users of supercomputers. They cared about power, not size. A well-managed firm in the traditional sense would have listed to their customers and not sold 5.5 inch drives.

It is left to a small firm to find a new market for the product, and indeed such a small market is only really profitable for a small firm. Of course, in the long run such small markets can grow, as did the one for 5.5 inch drives when it sparked the development of the laptop.

Are large firms doomed? No, says Christensen. Innovation requires focus, and it has to be essential to the existence of the organization to succeed. The answer is often to set up a small organization for whom the innovation is their core business, at let if flourish.

A challenge Christensen doesn’t address is how to identify which technologies are disruptive. A large firm can hardly set up a spinoff for every possible idea that crosses its desk, but it isn’t easy to know which will succeed in advance. That said, the book is and remains a classic on innovation, and if excessively long in some parts, it is focused on an important challenge for firms big and small.

Leading Change – John P. Kotter

“A managerial mindset will develop plans, not vision; it will vastly undercommunicate the need for and direction of change; and it will control rather than empower people.” – John P. Kotter

What’s the difference between a manager and a leader? Most of us can glibly dismiss managers as not-leaders, but explaining the difference takes a little more thought. Kotter argues that management is about the processes that keep a complicated system running smoothly, including planning, budgeting, organizing, staffing, and controlling. Leadership, in contrast, is what creates organizations in the first place or adapts them to change, by defining what the future should look like, aligning people with that vision, and inspiring them to make it happen.

Kotter is a giant in the change management field. Except, he compellingly rejects the idea of change management. What we should be doing, he argues, is change leadership. Historically, the focus in universities and businesses has been hiring and training managers. That’s a good thing: they are essential! But as a result, we are now short on leadership, and we often end up with a manager where leadership is needed.

Kotter presents eight steps to changing an organization. If you skip any, go back to step 1.

  • Establish a sense of urgency
  • Create a guiding coalition
  • Develop a vision and a strategy
  • Communicate the change vision
  • Empower broad-based action
  • Generate short-term wins
  • Consolidate gains and produce more change
  • Anchor new approaches in the culture

The first six are about building up momentum, while the final two are about preventing backsliding. The distinction between management and leadership also provides another lesson, though. Far too many leaders, or would-be leaders, spend so much time managing they don’t have any time to lead. Developing a vision and inspiring people takes time: all culture changes are slow, and cannot be rushed. One can hurriedly set up a budget; one can’t hurriedly change people’s minds.

Kotter is an engaging writer and the book is powerful. If you’re thinking about changing an organization—and these days, who isn’t—well worth the read.

The Fix – Jonathan Tepperman

“At a time when most of us have glumly concluded that our governments are broken and our domestic and international problems are insurmountable, I aim to show how the right individuals can overcome the most intimidating obstacles–if they follow the right strategies. This book makes a data driven case for optimism at a moment of gathering darkness…One of the basic premises of this book is that while the details of all the troubles currently wracking the world vary, they share an underlying cause: the failure of politicians to lead.”

The Fix introduces ten big problems, and ten countries or places which have successfully overcome them to flourish. Not all solutions can be transplanted or last for the long-term, of course, but they provide ideas and inspiration to the rest of us. The ten are:

  1. Inequality – Lula in Brazil with his Bolsa Familia (Cash grants to the poor)
  2. Immigration – Pierre Trudeau in Canada (Intentional multiculturalism)
  3. Islamic Extremism – Indonesia (Rehabilitate terrorists, and co-opt their agenda)
  4. Civil War – Rwanda (Village-level court system to sentence those involved in the genocide)
  5. Corruption – Singapore (strict penalties, systemic changes, and high pay for officials)
  6. Resource Curse – Botswana (Establish good institutions first)
  7. Energy – U.S. Shale gas (Strong property rights)
  8. Middle-Income Trap – South Korea (Use crises to strengthen the system)
  9. Political Gridlock (International) – Enrique Pena Nieta in Mexico (in the first part of his term, at least – bargain with everything on the table so can trade in reciprocity)
  10. Political Gridlock (U.S.) – Bloomberg’s fight against terrorism in NYC (Get the data and do the right thing)

The book is great fun. It’s well written, in a clear, informal style, and the author clearly had fun researching and writing it. His list is in some ways notable for what it omits—global warming does not appear, I suspect because there are no countries that have cracked it—but for all that they are still ten big problems. Some of his solutions I doubt will work elsewhere, or at least will require completely reformulating, but they remain interesting and very relevant.

Disclosure: I read The Fix as an advance reader copy. You can read reviews and order your own copy here: The Fix.

The Personal MBA – Josh Kaufman

“Instead of trying to absorb all of the business information that’s out there–and there’s a lot out there–use this book to help you learn what matters most, so you can focus on what’s actually important.”

Want to be a guaranteed millionaire? Save $10 a day for forty years at 8% interest. Not something that comes up in many MBAs, but actually quite interesting when you think about it. Two lattes a day, and retire a millionaire! Though, 8% is pretty optimistic these days. Anyway.

MBAs are expensive. Really expensive. So expensive, you might wonder if it’s really worth it. For Josh Kaufman, the answer is usually not, unless you’re hoping to work for an investment bank, lead a fortune 500 company, or be at a top management consulting firm. Too many modern MBAs focus largely on finance, which is relevant in those settings but not if you want to, say, actually run a business.

In response, Kaufman has done his best to distill the many business books he has read to some concrete lessons. The ‘Personal MBA’ is a process of reading one hundred best books on business he recommends, focused on how business actually works. What are the key parts of any business? How do you find a grow a business idea? What are the three universal currencies (resources, time, and flexibility)?

Overall, the Personal MBA is excellent: it does a great job distilling concepts into bite-sized pieces, and it is well-written and clear. It stumbles a few times—some of the bite-sized pieces are so small as to be basically useless, and the risk of a personal MBA is that you don’t realize where you’ve misunderstood, so a few of his explanations are not quite correct—but if you’re looking for a clear, concise, and well-written introduction to a wide selection of business concepts, it’s a great resource.

United: Thoughts on Finding Common Ground and Advancing the Common Good – Cory Booker

“What we need now, more than anything else, are people willing to serve as uniters–people in our communities who can rally others for the greater good, reject cynicism and winner-take-all politics, and embrace the more difficult work of this generation: to unite our country in common cause.” – Cory Booker

A man sees a child drowning in a river, jumps in, and drags her to the bank. As he gets the child to safety, he sees another one, dives in, and retrieves him. He sees more children, and keeps diving in, again and again. As he reaches his limits, he sees another man walking by. He yells at him to help – there are children in the river! The man ignores him, and starts walking faster. He yells again, and the man starts sprinting. The man yells a third time – what are you doing, there are kids in the river! The other man finally turns around and says: “I’m going upriver so I can find out why all those kids are in the river and stop it!”

Cory Booker is the fourth black person to be popularly elected to the Senate (the third was Barack Obama). His name was tossed around as a potential vice-presidential candidate for Hillary Clinton. At his best, he actively strives to appeal to left and right, focusing on making people’s lives better and serving the common good rather than partisan politics.

The book can be inspiring. Booker has done some amazing things, including a tremendous focus on reducing crime and encouraging economic development in Newark, where he became city counsellor and then mayor. He has in many ways forged his own reputation through his personal involvement in public service, and that’s a testament to his determination. My only complaint would be he occasionally misunderstands economics, such as when he discusses the tragedy of the commons, but then he is a lawyer by training, not an economist. An engaging read about a prominent US politician.

Information Dashboard Design – Stephen Few

“Eloquence through simplicity”

One of the largest challenges facing high-level management or leaders is information. A large organization is complicated at the best of times, and the information passed on by lower-level management is distorted by their own biases and interests. Even when you get unbiased information, it may not be clear what matters or what you should pay attention to.

Enter the dashboard. There are many definitions, but Stephen Few uses a relatively simple one: a dashboard is a “visual display of the most important information needed to achieve one or more objectives, consolidated and arranged on a single screen so the information can be monitored at a glance.”

In other words, the reader should be able to look at the dashboard and take in what they need to know in a single glance. They are an overview of performance.

So far so good, and yet many dashboards fail to achieve this purpose. They use misleading diagrams, or colours that provide no information but make it hard to take information in quickly, or have a poor data-to-ink ratio. Some will clutter the display with unnecessary visual effects, or arrange information poorly, or fail to consider exactly what the audience needs to know.

The solution is simplicity. Every pixel in a dashboard should have a purpose, or you should remove it. Dashboards should 1) maximize the data-to-ink ratio, and 2) emphasize the data. IT workers should push back when customers demand poor dashboards, and give them not what they want, but what they need. No dashboard can do everything, and pretending they can will only create confusion.

The book spends most of its time going through examples, which are particularly informative. Few highlights some dashboards that fail, and some that succeed, in a wide variety of contexts. This isn’t a casual read, but if you use dashboards in your own life (and they are surprisingly general in purpose – you could use one for your physical exercise, for example!), it is an excellent one, full of rich advice and good ideas.

The Ethics of Influence – Cass Sunstein

“The private sector inevitably nudges, as does the government. No government can avoid some kind of choice architecture. We can object to particular nudges, and particular goals of particular choice architects, but not to nudging in general.” – The Ethics of Influence

Two young fish are swimming along in the ocean. They pass an older fish, who says “morning boys, how’s the water?” The young fish keep swimming along (like many young fish, they are somewhat rude to their elders), until one turns to the other and says: “What’s water?”

This, says Cass Sunstein, is the story of how we are affected by our environment. The effect is so everpresent we often don’t even know it is there, and it is inescapable. At a time when nudges have been enormously popular with governments (see, for example, the UK Behavioural Insights Team, or the US Social and Behavioral Sciences Team), the question of whether they are ethical is very salient.

Perhaps unsurprisingly given Sunstein’s role in popularizing nudges, The Ethics of Influence argues they are. It advances four key arguments: that individual nudges can definitely be unethical, but that nudging qua nudging is not unethical in the same way that taxes qua taxes are not; that objections are pointless, because nudges are inescapable, such as snowy days increasing how many four-wheel drives are purchased and then returned to car dealers; that it’s possible to set the rules of the game, including nudges, without predetermining outcomes (for example, by making a decision easier across the board); and that in surveys, people prefer educational campaigns to direct nudges, but if they are told that education is less effective, support for nudges increases.

Sunstein’s definition of nudges is quite generous, which can sometimes muddy the waters: he includes all educational campaigns as a nudge, for example. That’s not wrong—after all, it is a non-coercive form of affecting behaviour—but it is very different from the examples that most people have ethical concerns about, such as using opt-out to encourage organ donation. At a few points, the book feels closer to salesmanship than analysis: in a chapter on environmental nudges he repeatedly raises the example of setting printers to double-sided defaults, cutting paper use by 40%. It’s a good and useful example, but if you’re already a critic of nudges, that isn’t what you have in mind.

Ethics of Influence is more academic than some of Sunstein’s recent books, and so readers expecting Wiser, Simpler, or Nudge may be a bit taken aback. It is heavily footnoted and abstract, making it somewhat hard to follow at points. It’s also on a very important topic, and one that is making huge waves in government. Probably not a book for the casual reader, but if you’re already interested in the field, Sunstein is a giant in it, and his arguments are relevant and important.

Disclosure: I read this book as an advance reader copy. You can read more reviews and order it here: The Ethics of Influence.

If we can put a man on the Moon…: Getting big things done in government – William D. Eggers and John O’Leary

“The requirements for achieving great things are two simple but far from easy steps–wisely choosing which policies to pursue and then executing those policies. The difference between success and failure is execution.”

It has become something of a truism that just having good ideas isn’t enough: they also have to be implemented well. Eggers and O’Leary (who should be a comedy duo, based on their names) argue that because we don’t always realize this, we tend to spend a lot of time looking for someone to blame when something goes wrong, rather than realizing the flaw is often systemic. When we try to solve a systems problem by changing an individual, we inevitably fail.

The book maps out how to end up with a good public policy. Start with a good idea; turn that idea into a specific design, often through writing some draft legislation; win approval for the idea (more of an issue in the American system than in Parliamentary ones, in which the party often has a majority already and so the parliamentary step is straightforward); implement it competently; generate the desired results; and over time, re-evaluate and look for ways to do better. All the while, of course, avoiding classic traps like confirmation bias, overconfidence, and complacency.

The book is strongest if you aren’t familiar with the various ‘innovative’ practices going around already. Unfortunately, most of their examples—prizes for innovation, hackathons, the London congestion charge, etc—have been analyzed at length in the past. Eggers and O’Leary come from the American civil service, for which the practices are relatively new, but for other readers most of it won’t seem that exciting. The authors also have a disturbing tendency to make up their own non-intuitive names for things, which can sometimes be confusing. Overall, not a bad book, but probably not new for most readers in the field.

Understanding Variation – Donald J. Wheeler

“Businessmen are finding that while they have more numbers than ever before, they still do not know what these numbers mean.”

“This book was written to help organizations overcome the effects of numerical naivete.”

Understanding Variation is a classic in understanding and measuring how businesses work. Its key lesson is that things vary. When we see that trade is down in February compared to last year, it’s tempting to assume that means something. The media will certainly report it as such, but we really don’t have any reason to do so. For that data to be meaningful would require that last year be ‘normal.’ I’m not sure that’s ever happened.

Variation is a significant challenge for businesses. If a business has bad results one month, should it make changes? Wait? Ignore it? There are no hard and fast rules, though entire disciplines have arisen over what type of results mean something (see: Six Sigma). Even good managers fall victim to regression to the mean: when they see results that are worse than average, they reprimand the employee, and things get better! Of course, when they see good results, they reward the employee, and things get worse. Managers learn to always be mean, rather than the true lesson that things can’t permanently stay above or below average.

Wheeler presents a few key rules, including that no data have meaning apart from their context, and that to detect a signal, filter out the noise. Much of the book, however, focuses on laying out tools that can help businesses identify meaningful variation. Wheeler swears by the control or XmR chart, a time series combined with a graph showing the size of the change each period. It means you can track both level and variability simultaneously, and look for significant changes in either.

The book is a bit outdated now, but the lessons ring true. Variation was and remains a challenge, and one it is far too easy to neglect.

Working Minds – Beth Crandall, Gary Klein, and Robert Huffman

Cognitive Task Analysis “investigates what people know and how they think.” – Working Minds

Some people just seem to have a certain je-ne-sais-quoi. Nurses who know whether a baby is sick before the lab tests are back: firefighters who know when a building is about to collapse: chess grandmasters who can see the right move without thinking about it.

Whether services or manufacturing, more and more of the modern world relies on the knowledge of experts. Nurses, AI specialists, consultants, and a myriad of other professions all require expertise, and it isn’t always clear what exactly that means or how it can be transferred to others.

Enter Cognitive Task Analysis. The goal is to take an expert task and break it into pieces that can be organized, understood, and replicated. Working Minds is a how-to guide to making that happen: the method draws on concept maps, interviews, and other methods of trying to see into the head of experts and write down what they know and the processes they use, even if they aren’t aware of them themselves.

The book is aimed almost exclusively at practitioners, but the method itself is still interesting. The first half introduces a number of useful tools and ideas, and though probably too specialist for most readers, if this is something you’re interested in cognitive task analysis may be a good place to start. Working Minds, though a bit heavy-going at times, serves as a useful introduction to how to conduct one.

Working Minds gets bogged down in the second half, where it tries to address the potential use of cognitive task analysis. When it spends a chapter explaining that this would be useful to teach others how to do the tasks, for example, it feels like largely a waste of space; the benefits were pretty much self-evident.