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The Science of Fear

'The Science of Fear' by Daniel Gardner (ISBN 0452295467) Confirmation bias leads us to accept more readily perceived facts that keep to our existing worldview more willingly than objectively considering all of the evidence. Many corporate leaders leverage disruptive change by making targeted, courageous moves toward new market opportunities. Many companies face up to risk with a strategic framework based on extenuating and managing the probable consequences but that line of attack might build bigger protective walls without guarding against the greatest risks—the ones that are unidentified. The uncertainty advantage is something different: an approach that compels managers to recognize the unknown as a market differentiator and an opportunity to give a free rein to innovative solutions that appeal to customers, investors, strategic partners, regulators, and competitors. Concisely, it is an opportunity to go well beyond the characteristic meaning of risk management—that is, seeking ways to achieve the best of the worst outcomes—to create new and sustainable value out of confusion.

In his book, The Science of Fear: How the Culture of Fear Manipulate Brain, New York Times bestselling author Daniel Gardner describes some of our pitfalls when it comes to framing risk properly:

Once a belief is in place, we screen what we see and hear in a biased way that ensures our beliefs are “proven” correct. Psychologists have also discovered that people are vulnerable to something called group polarization—which means that when people who share beliefs get together in groups, they become more convinced that their beliefs are right and they become more extreme in their views. Put confirmation bias, group polarization, and culture together, and we start to understand why people can come to completely different views about which risks are frightening and which aren’t worth a second thought.

It’s also much easier to simply be afraid of that with which we can easily recall to memory. Gardner uses Daniel Kahneman’s two systems of thought to explain:

You may have just watched the evening news and seen a shocking report about someone like you being attacked in a quiet neighborhood at midday in Dallas. That crime may have been in another city in another state. It may have been a very unusual, even bizarre crime—the very qualities that got it on the evening news across the country. And it may be that if you think about this a little—if you get System Two involved—you would agree that this example really doesn’t tell you much about your chance of being attacked, which, according to the statistics, is incredibly tiny. But none of that matters. All that System One knows is that the example was recalled easily. Based on that alone, it concludes that risk is high and it triggers the alarm—and you feel afraid when you really shouldn’t.

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Posted in Investing and Finance Philosophy and Wisdom

Review of N.R. Narayana Murthy’s Visionary Book, ‘A Better India: A Better World’

A Better India- A Better World is a stimulating book by an important business leader. When an Indian assistant first lent it to me, I wasn’t excited to read it but felt necessitated. I was very much completely astounded. N.R. Narayana Murthy, the founder and chairperson of Infosys organizes a rather comprehensible and positive vision to the world according to himself. If only many more business leaders thought like him, one might even feel tempted by this thing called “compassionate capitalism.” Narayana Murthy has thought much about India, his homeland, and its contradictions.

'Better India: A Better World' by N.R. Narayana Murthy (ISBN 0143068571)

If the eyes of all men were naturally jaundiced, all white objects would appear uniformly yellow. In the introduction to A Better India- A Better World, Narayana Murthy outlines,

The enigma of India is that our progress in higher education and in science and technology has not been sufficient to take 350 million Indians out of illiteracy. It is difficult to imagine that 318 million people in the country do not have access to safe drinking water and 250 million people do not have access to basic medical care. Why should 630 million people not have access to acceptable sanitation facilities even in 2009? When you see world-class supermarkets and food chains in our towns, and when our urban youngsters gloat over the choice of toppings on their pizzas, why should 51 per cent of the children in the country be undernourished? When India is among the largest producers of engineers and scientists in the world, why should 52 per cent of the primary schools have only one teacher for every two classes? When our politicians and bureaucrats live in huge houses in Lutyens’ Delhi and the state capitals, our corporate leaders splurge money on mansions, yachts and planes, and our urban youth revel in their latest sport shoes, why should 300 million Indians live on hardly Rs 545 per month (US$10 at current exchange rate), barely sufficient to manage two meals a day, with little or no money left for schooling, clothes, shelter and medicine?

His starting point is Franklin D. Roosevelt’s “four freedoms”—freedom of speech and expression, freedom of religion, freedom from want, and freedom from fear. He later elaborates on what a “civilized society” entails: “a society where everybody has equal opportunity to better his or her life; where every child has food, shelter, healthcare, and education; a society where duties come before rights; where each generation makes sacrifices to make life better for the next generation.” Obviously, many of these tenets are increasingly not present in today’s USA and, worse; many Americans on the right would dispute these principles as smacking of socialism. In this case, an effect has been given for a cause.

Could we be certain that the admeasurements of these two different meridians were made without error, this would, undoubtedly, be a demonstrative proof of the irregularity of the earth’s figure. Narayana Murthy is a well read and well-travelled, learned man who clearly thinks a lot about societal issues. In the introduction, his acknowledged three books that have influenced him deeply: The Protestant Ethic and the Spirit of Capitalism by Max Weber; My Experiments with Truth by Mahatma Gandhi; and Peau Noire, Masques Blancs by Franz Fanon. This rather eclectic selection shows the breadth of his reading and attests to an open mind. He builds his own philosophy on these disparate strains of thought, emphasizing the importance of values and leadership. He sets out early in the book that, “I do not know of any community—a company, an institution or a nation—that has achieved success without a long journey of aspiration, hard work, commitment, focus, hope, confidence, humility and sacrifice”. This question cannot be resolved exactly, without the author’s help. The first time he was restored, he thought he actually touched whatever he saw; but by degrees his experience corrected his numberless mistakes.

His student years in France in the 1970s were very important in forming his thinking. In the first chapter, a lecture to students, he compares France to India for its civil-mindedness: “In France, everybody acted as if it was their job to discuss, debate and quickly act on improving public facilities. In India, we discuss debate and behave as if the improvement of any public facility is not our task, and consequently, do not act at all.” His deduction: being a developing country is a mindset. Here he breaks clear of the Left, placing the onus on the individual, as well as the society as a whole, to take responsibility for its own destiny. He tells a story of how he lost any compassion for the Left after having been imprisoned by Bulgarian authorities when traveling back from Paris to India in 1974.

The next event that left an indelible mark on me occurred in 1974. The location: Nis, a border town between former Yugoslavia, now Serbia, and Bulgaria. I was hitchhiking from Paris back to Mysore, India, my home town.

By the time a kind driver dropped me at Nis railway station at 9 p.m. on a Saturday night, the restaurant was closed. So was the bank the next morning, and I could not eat because I had no local money. I slept on the railway platform until 8.30 pm in the night when the Sofia Express pulled in.

The only passengers in my compartment were a girl and a boy. I struck a conversation in French with the young girl. She talked about the travails of living in an iron curtain country, until we were roughly interrupted by some policemen who, I later gathered, were summoned by the young man who thought we were criticising the communist government of Bulgaria.

The girl was led away; my backpack and sleeping bag were confiscated. I was dragged along the platform into a small 8×8 foot room with a cold stone floor and a hole in one corner by way of toilet facilities. I was held in that bitterly cold room without food or water for over 72 hours.

I had lost all hope of ever seeing the outside world again, when the door opened. I was again dragged out unceremoniously, locked up in the guard’s compartment on a departing freight train and told that I would be released 20 hours later upon reaching Istanbul. The guard’s final words still ring in my ears — “You are from a friendly country called India and that is why we are letting you go!”

The journey to Istanbul was lonely, and I was starving. This long, lonely, cold journey forced me to deeply rethink my convictions about Communism. Early on a dark Thursday morning, after being hungry for 108 hours, I was purged of any last vestiges of affinity for the Left.

I concluded that entrepreneurship, resulting in large-scale job creation, was the only viable mechanism for eradicating poverty in societies.

Deep in my heart, I always thank the Bulgarian guards for transforming me from a confused Leftist into a determined, compassionate capitalist! Inevitably, this sequence of events led to the eventual founding of Infosys in 1981.

Cofounder and executive chairman N.R. Narayana Murthy came out of retirement in 2013 to help right the Infosys ship. His return resulted in improved financial performance, although it has been marked by numerous high-profile executive resignations. Murthy again stepped down and re-entered retirement to make way for CEO Vishal Sikka in August 2014. Microsoft Founder Bill Gates said, “Narayana Murthy overcame many obstacles and demonstrated that is possible to create a world-class, values-driven company in India. Through his vision and leadership Murthy sparked a wave of innovation and entrepreneurship that changed the way we view ourselves and how the world views India.”

Review of N.R. Narayana Murthy's Visionary Book, 'A Better India- A Better World' This is a collection of 38 essays and speeches given at a variety of fora during the 2000s and selected for the book by the author himself. They are divided into sections:

  • Address to students;
  • Values;
  • Important national issues;
  • Education;
  • Leadership challenges;
  • Corporate and public governance;
  • Corporate social responsibility and philanthropy;
  • Entrepreneurship;
  • Globalization;
  • three short chapters on Infosys.

In such a collection, it is inevitable that there are overlaps between the chapters and many recurrent themes. I’ll pick a few themes that I found interesting here below.

He addresses students in a variety of schools, ranging from prestigious institutions like INSEAD, Indian Institute of Technology, IESE Business School in Barcelona and NYU, to various other universities in India. He exhorts his values: “You must believe in and act according to the principle that putting public interest ahead of private interest in the short term will be better for your private concerns in the long run.” … “Ego, vanity, and contempt for other people have clouded our minds for thousands of years and impeded our progress. Humility is scarce in this country.” … “No county that has shunned merit has succeeded in solving its problems.” … “The reason for the lack of progress in many developing nations is not the paucity of resources but the lack of management talent and professionalism.” The winds of the temperate zone are composed of the eddies of these two united.

Narayana Murthy is a fan of globalization and refers to the “global bazaar” and Thomas Friedman’s “flat world” in several places. In this context, he calls for “an environment of tolerance and respect for multi-culturalism.” He sees global warming and environmental degradation as major threats and sees that the answers must lie in global cooperation: “The solution is not to force developing nations to forgo what the developed world has enjoyed for over a century. It is to come together as one planet and use innovation in technology to produce alternate energy solutions and reduction of carbon emissions.” His thinking reflects the intergenerational equity perspective embedded in the original definition of sustainable development: “After all, this is the only planet we have. Conduct yourself as if you have borrowed it from the next generation. Remember that you will have to give it back to them in good shape.” The time of feeling the pulse is in a morning, some time after getting up, and before reduction of carbon emissions.

A Better India- A Better World is also very critical of laissez-faire capitalism, a theme that resonates throughout the book: “Unfortunately, the greed of several corporate leaders, the meltdown of Wall Street, the increasing differences between the salaries of CEOs and ordinary workers, and the unbelievable severance compensation paid to failed CEOs have called into question whether capitalism is indeed a solution for the benefit of all, or if it is an instrument for a few cunning people to hoodwink a large mass of gullible middle-class and poor people. Never before in the history of capitalism have so few people brought so much misery to so many.” His views of how to manage a company are in line with his broader beliefs: “The only way you can save capitalism and bring it back to its shining glory is by conducting yourselves as decent, honest, fair, diligent, and socially conscious business leaders. In every action of yours, you have to ask how it will make the lowest level worker in your corporation and the poorest person in your society better. You have to learn to put the interest of the community—your corporation, your society, your nation and this planet—before your own interest.” In light of these issues, Infosys has launched a number of initiatives to improve its performance. The company has some way to go before rectifying its position, but a number of signs are promising, with revenue growth, margins, client mining, and employee attrition improving. Again emphasizing the need for sacrifice, he states that, “(T) to succeed in these days of globalization, global warming and laissez-faire capitalism, every worker in your corporation will have to accept tremendous sacrifices in the short term and hope that goodness will, indeed, succeed in the long term and make life better for every one of them.” Certainly not the thinking en vogue on this continent!

Review of N.R. Narayana Murthy's Visionary Book, 'A Better India- A Better World' Narayana Murthy is also rather harsh on India. In a chapter entitled “What Can We Learn from the West,” he chastises his own nation for faulty values: “Indian society has, for over a thousand years, put loyalty to family ahead of loyalty to society.” … “Unfortunately, our attitude towards family life is not reflected in our attitude towards the community. From littering the streets to corruption to violating contractual obligations, we are apathetic to the community good.” … “Apathy in addressing community matters has held us back from making progress which is otherwise within our reach. We see serious problems around us but do not try to solve them. We behave as if the problems do not exist or as if they belong to someone else.” He continues, “Our intellectual arrogance has also not helped our society. I have travelled extensively and, in my experience, have not come across another society where people are as contemptuous of better societies as we are, with as little progress as we have achieved.” He identifies things that India should learn from the West, including accountability, dignity of labor (“everybody in India wants to be a thinker and not a doer”), and professionalism (punctuality, respect for other people’s time, respecting contractual obligations), concluding that “the most important attribute of a progressive society is respect for others who have accomplished more than they themselves have, and the willingness to learn from them.” The conduct of the appetite regulates the health; and this is not enough regarded.

Elaborating on individual responsibilities, he adds one more: discipline. “There are several ingredients for national development—natural resources, human resources, leadership, and finally, discipline.” … “The utter lack of discipline exhibited by our people is rendering these other three powerful factors ineffective for fast-paced economic growth. We see umpteen examples of undisciplined behavior around us every day. What is even sadder is that this behavior has become the norm even among the powerful and the elite.” … “Discipline is about complying with the agreed protocols, norms, desirable practices, regulations and the laws of the land designed to improve the performance of individuals and societies. Discipline is the bedrock of individual development, community development, and national development.” In this category, Narayana Murthy includes aspects, such as lack of discipline in thought, or intellectual dishonesty (objectivity to focus on outcomes and results, rather than politics or focus on caste and religion; corruption). To achieve discipline, India needs role models (honest, accountable, disciplined leaders committed to change), swift and harsh punishment of offenders, transparency, political reform, and an improved bureaucracy. Manmohan Singh, former Prime Minister of India, wrote, “Narayana Murthy is a role model for millions of Indians. An iconic figure in the country, he is widely respected and looked up not only for his business leadership but also for his ethics and personal conduct. He represents the face of the new, resurgent India to the world.”

Review of N.R. Narayana Murthy's Visionary Book, 'A Better India- A Better World' The part focusing on important national issues considers a wide range, including the role of population in economic development in India. Talking about population growth as a strain to development risks being attacked from both the Left and the Right these days, but Narayana Murthy barges right into the issues. He highlights the need for “good human capital” but also warns “a failure to stabilize India’s population will have significant implications for the future of India’s economy” and that “high population densities have also led to overloaded systems and infrastructure in urban areas.” He links the population debate to environment and resources, in particular energy demand, noting how the combined demands from India and China will put pressure on world resources: “The rapid growth in emerging economies cannot be sustained in the face of mounting environmental deterioration and resource depletion.” He sees a clear role for the government, which must “focus on conservation-friendly policies. For example, subsidies on conventional fuel make it difficult for renewable energy sources to compete and should be removed at least for rich and middle-class people.” … “The government can play a key role as a regulator in making Indian industry environmentally responsible.” Would someone please tell that to the politicians in Washington, DC?

The fourth theme is a cornerstone of the Indian spiritual tradition: self-knowledge. Indeed, the highest form of knowledge, it is said, is self-knowledge. I believe this greater awareness and knowledge of oneself is what ultimately helps develop a more grounded belief in oneself, courage, determination, and, above all, humility, all qualities which enable one to wear one’s success with dignity and grace.

So, how to deal with the issue of excessive population growth? Well, there is the need to meet unmet need of contraception and the issue of how Indian states have failed to implement family planning programs. Narayana Murthy recognizes that there’s been a significant decrease in population growth in certain southern states, such as Kerala, Tamil Nadu, Karnataka and Andhra Pradesh, where “state governments here focused on human development, opened up local economies, and improved social services … Rising female literacy in these states contributed to the success of family planning … A focus on women’s and children’s health also contribute to population control.” He concludes, in line with what is also known from empirical literature: “human development goes hand in hand with lower population growth.” What he doesn”t mention is that states like Kerala have for decades been run by parties from the Left.

A Better India- A Better World chapter “Framework for Urban Planning in Modern India” also recognizes the importance of planning but calls for “radical, immediate reform in the planning and management of our cities” that “must adequately address the shortage of low-cost housing.”

Review of N.R. Narayana Murthy's Visionary Book, 'A Better India- A Better World' Moving to corporate governance, he extols the virtues of good corporate governance to enhance corporate performance while ensuring that corporations conform to the interests of investors and society by “creating fairness, transparency, and accountability in business activities among employees, management and the board.” Infosys has many long-standing client relationships, a well-managed global delivery model, and a comprehensive services portfolio. “The abuse of corporate power results from incentives within firms that encourage a culture of corruption. … Clearly, good governance requires a mindset within the corporation which integrates the corporate code of ethics into the day-to-day activities of its managers and workers.” “Corporate leaders have to create a climate of opinion that values respectability in addition to wealth.” To recapitulate all that has been said upon the subject of compassionate capitalism: long continued tones are nothing more than a repetition of the same stroke and tone. Like the two halves of an ellipse, with their ends turned the contrary way.

So what is the “compassionate capitalism” that Narayana Murthy longs for? As said by him, it is about “bringing the power of capitalism to the benefit of large masses. It is about combining the power of mind and heart; the good of capitalism and socialism … The benefits of growth have to be distributed widely.” While this does not exist anyplace, Narayana Murthy does pay some respect to what he calls the “Swedish model.”

Review of N.R. Narayana Murthy's Visionary Book, 'A Better India- A Better World' N.R. Narayana Murthy returns to the leitmotif of the lack of credibility of capitalism today: “Greedy behavior from corporate leaders has strengthened public conviction that free markets are tools for the rich to get richer at the expense of the welfare of the general public.” Lest capitalism is rejected as the most accepted model for growth in developing countries and by the alienated poor, the business leaders have to regain the trust of society and abide the value system of the community where they operate. Touching on a debate that rages in both America and Europe, Narayana Murthy weighs in on executive compensation: “Business leaders should shun excessive managerial compensation. Managerial remuneration should be based on three principles—fairness with respect to the compensation of other employees; transparency with respect to shareholders and employees; and accountability with respect to linking compensation with corporate performance … We have to create a climate of opinion which says respect is more important than wealth.” Certainly. A number of high-profile client-facing executive departures could negatively affect the firm’s standing with legacy clients.

At the end of A Better India- A Better World, this rather prescient and socially aware business leader sees globalization in an virtually absolutely favorable light, concluding that “we need a flat world because is spreads the American beliefs in free trade to the rest of the world; it benefits consumers from all over the globe; it helps create a world with better opportunities for everyone; and, finally, it brings global trade into focus, shunning terrorism and creating a more peaceful world”. Let us for a moment compare this universe to a palace, erected by the divine Architect, and the unphilosophical spectator to a foreigner, who sees but the external part of the building. “Humble and self-effacing, Murthy is known to fly economy class and lives in a modest home in Bangalore—proof, say his fans, that you can combine business success with Gandhian humility.” said Time magazine of Narayana Murthy. Murthy, [says the Time magazine], has not sold his soul for money and success. One of country’s most admired men, he is vigilant about his employees’well-being, granting stock options, building exercise facilities and spreading values as much as wealth.

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Posted in Management and Leadership Software and Programming

100 Best Business Books of All Time

Following years of reading, appraising, and retailing business books, 800-CEO-READ creator Jack Covert, ex-president Todd Sattersten, and present general manager Sally Haldorson have selected and appraised the one hundred greatest business titles of all time—the ones that dispense the biggest payoff for today’s occupied readers. It’s a great list, and in the vein of all lists, bound by argument and long-windedness about what is and isn’t contained in this list. Each book gets a couple of pages of outline handling.

Best Business Books on Improving Your Life

Best Business Books on Leadership

Best Business Books on Strategy

Best Business Books on Sales and Marketing

Best Business Books on Economics and Metrics

Best Business Books on Management

Best Business Biographies

Best Business Books on Entrepreneurship

Best Narratives of Fortune and Failure

Best Business Books on Innovation and Creativity

Best Books on Big Ideas About the Future of Business

Best Business Books on Management and Leadership Lessons

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Posted in Business and Strategy Leaders and Innovators Management and Leadership Mental Models and Psychology Philosophy and Wisdom

Best Books on Creativity

Inspire Greater Creativity

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Posted in Mental Models and Psychology

Books on Creativity Recommended by Ted Leonsis

Creative people often retain a capability to adopt a number of diverse stances or perspectives. When they look at their own work, they focus interchangeably on the technical aspects, the visual design, the ideas, and so on. They develop a set of standards or a checklist that leads their attention and helps them to scrutinize the creative process. Moreover, they master a lexis that enables them to assess their work in multiple dimensions, so that they can pass more qualified judgements than just ‘good’ or ‘bad.’

A multidimensional valuation gives students feedback, which helps them determine their strengths and detect areas in which they need to improve. The scores on such valuations can also help an educational program to review its results, contemplate its position and modify the course if necessary. Although creativity can only make the most of as originality, utility, and surprise all approach unity, the same description indicates that there are seven different ways that creativity can minimize. These alternatives were identified as

  • routine, reproductive, or habitual ideas,
  • accidental response bias,
  • irrational perseveration,
  • problem finding,
  • rational suppression,
  • irrational suppression, and
  • blissful ignorance.

According to conventional wisdom, creativity is somewhat done by creative people. Even creativity researchers, for several decades, seemed to direct their work by this principle, converging predominantly on individual differences: What are creative people like, and how are they different from most people in the world? Although this person-centered tactic yielded some important findings about the backgrounds, personality traits, and work styles of marvelously creative people, it was both limited and limiting. It presented little to practitioners related with helping people to become more creative in their work, and it virtually ignored the role of the social environment in creativity and innovation. In contrast to the long-established approach, the Componential Theory of Creativity assumes that all humans with normal capabilities are able to produce at least judiciously creative work in some domain, some of the time-and that the social environment (the work environment) can manipulate both the level and the incidence of creative behavior.

Books on Creativity Recommended by Ted Leonsis Ted Leonsis, the Internet entrepreneur, former AOL senior executive, and owner of the Washington Wizards and Washington Capitals recommends the following books on creativity.

  • Ed Catmull’s Creativity : 1970s computer animation pioneer and Pixar co-founder Ed Catmull‘s appealingly comprehensive explanation of how the studio he co-founded generated hits such as the Toy Story trilogy, Up, and Wall-E. Catmull closes that it is a leader’s responsibility to stop ambitious and perfectionist staff destroying their health and that of others. Aiming for zero mistakes is the worst possible goal for a creative project. He argues that a company has to appreciate the work of creativity and learn how to navigate the failures that will happen along the way.
  • 'Crossing the Chasm' by Geoffrey A. Moore (ISBN 0062292986) Geoffrey A. Moore’s Crossing the Chasm: Author Geoffrey A. Moore is managing partner of TCG Advisors, a consulting practice that delivers business and marketing strategy assistances to well-known high-technology companies. Moore declared that the greatest change in the marketing approach happens at the chasm—the organizations to the right of the chasm have meaningfully different opportunities than those on the left. Many ideas fail in the marketplace because their enthusiasts are not capable to cross the chasm.
  • Elmira Bayrasli’s From the Other Side of the World: Journalist Elmira Bayrasli posits that brilliant people around the world are conquering insoluble obstacles to build high-growth businesses that are driving wealth and building communities, regions and countries. By means of seven noteworthy stories, Bayrasli shows the next set of successful entrepreneurs could come not only from the as Silicon Valley but also from Nigeria, Pakistan or Mexico. She writes, “Entrepreneurs, by the very nature of what they do—disrupt and innovate—provide a necessary check and balance on government that no one else can—not businesspeople, not NGOs, not civil society organizations. They help remake the social order and help move progress forward, giving rise to new ideas, new industries, and new possibilities and forcing change. That is what has made them both heroes and villains that many in power feel the need to keep in check.”
  • 'Stop Playing Safe' by Margie Warrell (ISBN 1118505581) Margie Warrell’s Stop Playing Safe: When people confront a challenge, they often recoil into inaction. Drawing from the latest research plus dialogues with highly successful leaders and entrepreneurs, Warrell offers practical tools and inspiration needed to enjoy greater confidence, accomplishment and success in work and life. Outline your sense of purpose and engage in more inspiring goals. Circumnavigate uncertainty with clarity and be more decisive in adversity. Surmount the fear of failure and bounce back from setbacks with superior flexibility. Toughen your leadership ability and expand your influence regardless of position. Build a culture of courage in your office that advances bottom line results. As you strive to reach your goals, as you make those tough choices and take risks, look for your enthusiasm, find your power, and aim to make a difference. And know that this attitude—this mindset, this entrepreneurial way of looking at the world—runs though the lives of all successful people.
  • Linda A. Hill, et al.’s Collective Genius: The perpetual organizational challenge is to develop an organization capable of inventing over and over. Outdated, direction-setting leadership can work well when the resolution to a problem is known and forthright. The role of a leader of innovation is not to set a vision and stimulate others to follow it. It’s to create a cooperative spirit that is enthusiastic and capable to innovate. Collective Genius addresses (1) how leaders generate a willingness to do the hard work of innovation, and (2) how leaders can generate the ability to do the hard work of innovation.
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Posted in Management and Leadership Mental Models and Psychology

Read to Find Investment Ideas

Read to find investment ideas The secret of finding investment ideas can be summarized in one word: READ.

Of course, in order to spend a lot of time on business news, you must be interested in economic and financial affairs. But as you become more accustomed to accumulating and storing financial information, you will find the subject increasingly interesting, particularly if your interpretation of events leads to profits.

Nothing can motivate you more than your own success. The turbulence in the financial markets underscores the importance of becoming your own analyst. This will insulate you from other people’s opinions and will give you the confidence to pursue your own ideas and goals by checking out the facts.

The way to do this is with a disciplined system of reading and information gathering. Over time, you should acquire a financial file or library of companies, ideas and trends that warrant investment attention. To sniff out opportunities from the financial news requires an understanding of what to look for.

Two people might read the same article, one of whom may spot a nuance that suggests an important opportunity, while the other person sees nothing of significance.

What we aim to provide in this chapter are some hints and clues on what to look for in the financial news, what to read and how to accomplish all this in the least amount of time.

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Posted in Investing and Finance

Con Artists Thrive When Opportunity Meets Predisposition

Con Artists Thrive When Opportunity Meets Predisposition

Con artists are artists. It’s all about the soft skills—there are no hard skills here. They are unlike a sleazy salesperson was trying to sell you something. As a con artist, you often don’t see them coming, you even don’t realize quickly that you have been conned because they are all about the soft touch. We’re all subject to credulity, how others exploit this, what we can do to spot would-be manipulators and guard ourselves, and how we can use the same principles of coaxing for good rather than evil.

The commerce between discourses of authenticity and the confidence games played by counterfeiters, both literal and literary, is the subject of two recent studies. Conning people is an art, conning is an artistic skill. Con artists never had to ask for anything—people give it to them—their conference, their trust, their money, their respect—to the con artists willingly. People don’t really understand, a lot of times, that they’re victims of a con because they believe it so much they want to keep believing. That is why it is often really difficult to prosecute con artists because it is often difficult to pinpoint what crimes they have committed. The psychopath and the con artist have at least two traits in common: lack of empathy and enough perception to isolate someone’s vulnerabilities or desires and take advantage of them.

New Yorker columnist and science journalist Maria Konnikova explores in The Confidence Game how con artists prey on our susceptibility for believing what we wish were true and how this explains the inner workings of confidence and duplicity in our everyday lives.

There is a con or two that people use at work—that people fall for at work. People at work often end up conning others without realizing what they’re doing or without it initially. A lot of people will start cutting corners—not only the accountants but anyone who has to deal with money—let’s say a trader who had a bad quarter or bad portfolio performance or anyone where the numbers are not quite right. It’s common not to see this only in finance, but also in academia, scientists where the data has not come out quite as expected. In an increasingly over-populated planet being depleted of its precious natural resources do we need any more objects polluting our environment even if they are traditional paintings or sculptures? To change the data just a tiny bit and fudge the numbers ever so slightly saying, “the data should have come out” or, “that trade should have gone my way.” They justified that they just need a little bit of extra wiggle room or an edge just for this quarter and then everything will be better in the future quarters. And then it’s all going to work out.

What ends up happening is that it doesn’t work out because there’s a reason it didn’t work out in the first time. Usually, what ends up happening is that you give yourself a license to deceive and now what you end up as with a slippery slope. You have to keep doing it because you have already done it once. Before you know it you are entangled in being an outright con.

'The Confidence Game: Why We Fall for It' by Maria Konnikova (ISBN 0525427414) There is one man that I write about in a company and I had a chance to speak with his lawyer who had been originally very sympathetic with the fact that this finance person have had a bad quarter. It was for his family, it was for his company, and he had a good heart. A con artist who doesn’t have the skills to hack into your data can buy it cheaply on the black market. He did it in one quarter and was overlooked, but when he did it in subsequent quarters and investigation revealed that he had cheated the company of thousands of dollars on the corporate court for also something for his family, vacations, private jets. The sympathy quickly evaporated.

People who take that moral license are the same people who keep going. Con artists are made when opportunity meets predisposition. There are a small number of people in finance, science, who, if given an opportunity will have that side of their personality come out. he motivation for many of these peculiar constructions seems to be that people are gullible and easy to fool so why not do so? But this is simply not the case. People must place their trust in most societal interactions-with friends, colleagues, the media, and even strangers. If one should discover that someone or something is (intentionally) unreliable, their basic trusting nature will evolve into skeptical cynicism. Con artists aren’t just master manipulators; they are expert storytellers. Much as we are intrinsically inclined to trust, we are naturally drawn to a compelling story. Once they get away with it, the thrill and the knowledge that they got away with it will enable them to do it over and over again.

In academics, especially in social sciences, it’s easy to manipulate how you select your sample size, what statistical method you use, and do you use the statistical method to conform to you’re a priori hypothesis, the chances are slim that you are going to get caught.

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Value Investing: Philip Fisher on When to Sell a Stock

Common Stocks and Uncommon Profits, by Philip Fisher

Philip Fisher (1907–2004) is widely considered the pioneer and thought process leader in long-term value investing. Years after his death, Fisher

is widely respected and admired as one of the most influential investors of all time. Fisher developed his long-term investing philosophy decades ago

and discussed them in his seminal book, Common Stocks and Uncommon Profits. Common Stocks and Uncommon Profits was first published in 1958

and continues to be a must-read today for investors and finance professionals around the world.

Philip Fisher, Investor, Author of Common Stocks And Uncommon Profits Today, we will dig deeper into his selling discipline. For many investors, buying a stock is much easier than deciding when to sell it. Selling securities is much more difficult than buying them. The average investor often lacks emotional self-control and is unable to be honest with himself. Since most investors hate being wrong, their egos prevent taking losses on positions, even if it is the proper, rational decision. Often the end result is an inability to sell deteriorating stocks until capitulating near price bottoms.

Selling may be more difficult for most, but Fisher actually has a simpler and crisper number of sell rules as compared to his buy rules (3 vs. 15). Here are Fisher’s three rules for selling a stock:

  • Wrong Facts: There are times after a security is purchased that the investor realizes the facts do not support the supposed rosy reasons of the original purchase. If the purchase thesis was initially built on a shaky foundation, then the shares should be sold.
  • Changing Facts: The facts of the original purchase may have been deemed correct, but facts can change negatively over the passage of time. Management deterioration and/or the exhaustion of growth opportunities are a few reasons why a security should be sold according to Fisher.
  • Scarcity of Cash: If there is a shortage of cash available, and if a unique opportunity presents itself, then Fisher advises the sale of other securities to fund the purchase.

Many investors are reactive and sell at the same time everyone else does—when they’re fearful. But your emotions aren’t the best guide for making critical financial decisions. Long-term investors should not fear occasional swings in the market. When the market dips or takes an unusual turn, that is the perfect time to review your portfolio and re-evaluate your investing strategy.

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Mungerisms: Amusing Quotes from Charlie Munger from the Berkshire Hathaway 2014 Annual Meeting

Amusing Quotes from Charlie Munger from the Berkshire Hathaway 2014 Annual Meeting

Charlie Munger is not always politically correct, always offers a wealth of information, and hilarious now and then. At the 2014 annual meeting of Berkshire Hathaway, here are some of his best zingers:

  • On the interplay between CEOs and corporate directors regarding compensation: “You start paying directors of corporations two or three hundred thousand dollars a year, it creates a daisy chain of reciprocity where they keep raising the CEO and he keeps recommending more pay for the directors.”
  • On CEO pay and work habits: “Does the Supreme Court work less hard because they don’t get paid like corporate executives? We have some corporate directors who draw more pay than members of the Supreme Court. That’s crazy,”
  • 'Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger' by Peter D. Kaufman and Ed Wexler (ISBN 1578645018) On taxing the 1%: “The taxes on wealth were much higher when I was much younger. So for somebody of my age, I don’t think they’re ruining the world because I’ve lived through way more punitive taxes on the rich than we have now … I don’t think everybody who’s been especially favored should take the last dollar that he or she should get. I think we all have an obligation to dampen these fires of envy.”
  • On Facebook, Twitter, and the appeal of social media: “It just doesn’t interest me at all to gab all the time on the Internet with people and I certainly hate the idea of young people putting in permanent form the dumbest thoughts and the dumbest reports of action that you can ever imagine.”
  • On his favorite advance in technology: “I’m in love with the Xerox machine.”
  • On Donald Sterling, the then-owner of NBA Clippers, who then faced racial remarks and lifetime ban:”He’s a peculiar man. He’s past 80. His girlfriend has had so many facelifts she practically can’t smile. This is not the noblest ideal of what the American businessman should be.”

Insightful books about Charlie Munger

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Posted in Investing and Finance Philosophy and Wisdom

The 100 Greatest Novels of All Time

The 100 greatest novels of all time

Can’t decide what to read? Consider The Guardian’s list of top 100 novels ever written.

  1. “Don Quixote” by Miguel De Cervantes
  2. “Pilgrim’s Progress” by John Bunyan
  3. “Robinson Crusoe” by Daniel Defoe
  4. “Gulliver’s Travels” by Jonathan Swift
  5. “Tom Jones” by Henry Fielding
  6. “Clarissa” by Samuel Richardson
  7. “Tristram Shandy” by Laurence Sterne
  8. “Dangerous Liaisons” by Pierre Choderlos De Laclos
  9. “Emma” by Jane Austen
  10. “Frankenstein” by Mary Shelley
  11. “Nightmare Abbey” by Thomas Love Peacock
  12. “The Black Sheep” by Honoré De Balzac
  13. “The Charterhouse of Parma” by Stendhal
  14. “The Count of Monte Cristo” by Alexandre Dumas
  15. “Sybil” by Benjamin Disraeli
  16. “David Copperfield” by Charles Dickens
  17. “Wuthering Heights” by Emily Brontë
  18. “Jane Eyre” by Charlotte Brontë
  19. “Vanity Fair” by William Makepeace Thackeray
  20. “The Scarlet Letter” by Nathaniel Hawthorne
  21. “Moby-Dick” by Herman Melville
  22. “Madame Bovary” by Gustave Flaubert
  23. “The Woman in White” by Wilkie Collins
  24. “Alice’s Adventures In Wonderland” by Lewis Carroll
  25. “Little Women” by Louisa M. Alcott
  26. “The Way We Live Now” by Anthony Trollope
  27. “Anna Karenina” by Leo Tolstoy
  28. “Daniel Deronda” by George Eliot
  29. “The Brothers Karamazov” by Fyodor Dostoevsky
  30. “The Portrait of a Lady” by Henry James
  31. “Huckleberry Finn” by Mark Twain
  32. “The Strange Case of Dr Jekyll and Mr Hyde” by Robert Louis Stevenson
  33. “Three Men in a Boat” by Jerome K. Jerome
  34. “The Picture of Dorian Gray” by Oscar Wilde
  35. “The Diary of a Nobody” by George Grossmith
  36. “Jude the Obscure” by Thomas Hardy
  37. “The Riddle of the Sands” by Erskine Childers
  38. “The Call of the Wild” by Jack London
  39. “Nostromo” by Joseph Conrad
  40. “The Wind in the Willows” by Kenneth Grahame
  41. “In Search of Lost Time” by Marcel Proust
  42. “The Rainbow” by D. H. Lawrence
  43. “The Good Soldier” by Ford Madox Ford
  44. “The Thirty-Nine Steps” by John Buchan
  45. “Ulysses” by James Joyce
  46. “Mrs Dalloway” by Virginia Woolf
  47. “A Passage to India” by EM Forster
  48. “The Great Gatsby” by F. Scott Fitzgerald
  49. “The Trial” by Franz Kafka
  50. “Men Without Women” by Ernest Hemingway
  51. “Journey to the End of the Night” by Louis-Ferdinand Celine
  52. “As I Lay Dying” by William Faulkner
  53. “Brave New World” by Aldous Huxley
  54. “Scoop” by Evelyn Waugh
  55. “USA” by John Dos Passos
  56. “The Big Sleep” by Raymond Chandler
  57. “The Pursuit Of Love” by Nancy Mitford
  58. “The Plague” by Albert Camus
  59. “Nineteen Eighty-Four” by George Orwell
  60. “Malone Dies” by Samuel Beckett
  61. “Catcher in the Rye” by J.D. Salinger
  62. “Wise Blood” by Flannery O’Connor
  63. “Charlotte’s Web” by E. B. White
  64. “The Lord Of The Rings” by J. R. R. Tolkien
  65. “Lucky Jim” by Kingsley Amis
  66. “Lord of the Flies” by William Golding
  67. “The Quiet American” by Graham Greene
  68. “On the Road” by Jack Kerouac
  69. “Lolita” by Vladimir Nabokov
  70. “The Tin Drum” by Gunter Grass
  71. “Things Fall Apart” by Chinua Achebe
  72. “The Prime of Miss Jean Brodie” by Muriel Spark
  73. “To Kill A Mockingbird” by Harper Lee
  74. “Catch-22″ by Joseph Heller
  75. “Herzog” by Saul Bellow
  76. “One Hundred Years of Solitude” by Gabriel García Márquez
  77. “Mrs Palfrey at the Claremont” by Elizabeth Taylor
  78. “Tinker Tailor Soldier Spy” by John Le Carré
  79. “Song of Solomon” by Toni Morrison
  80. “The Bottle Factory Outing” by Beryl Bainbridge
  81. “The Executioner’s Song” by Norman Mailer
  82. “If on a Winter’s Night a Traveller” by Italo Calvino
  83. “A Bend in the River” by V. S. Naipaul
  84. “Waiting for the Barbarians” by J.M. Coetzee
  85. “Housekeeping” by Marilynne Robinson
  86. “Lanark” by Alasdair Gray
  87. “The New York Trilogy” by Paul Auster
  88. “The BFG” by Roald Dahl
  89. “The Periodic Table” by Primo Levi
  90. “Money” by Martin Amis
  91. “An Artist of the Floating World” by Kazuo Ishiguro
  92. “Oscar And Lucinda” by Peter Carey
  93. “The Book of Laughter and Forgetting” by Milan Kundera
  94. “Haroun and the Sea of Stories” by Salman Rushdie
  95. “La Confidential” by James Ellroy
  96. “Wise Children” by Angela Carter
  97. “Atonement” by Ian McEwan
  98. “Northern Lights” by Philip Pullman
  99. “American Pastoral” by Philip Roth
  100. “Austerlitz” by W. G. Sebald
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Posted in Hobbies and Pursuits