Notes From My Journal 

The Danger of Freedom: People Do What They Want to Do, Not What You Think They Should Want to Do

A Boston-based “people analytics firm” named Humanyze has instituted a mandatory parental leave policy for male employees. The motive is to “equalize” the work/parent experience.

Why is it mandatory? Why not just give fathers the option?

Because when given the freedom to choose, Humanyze’s CEO explained to the WSJ, two problematic things happen:

  1. The great majority of men do not take the time off. Even though they can, they choose to continue working.
  2. And the great majority of women choose to stay home. The fact that their husbands are free to take time off and help them out doesn’t seem to matter.

This is what happened in Denmark after men were given the legal right to paternity leave. The hope was that by forcing businesses to give fathers the option, many of them would take it and thereby do more of their “fair share” of the baby care. This would, in turn, give mothers the opportunity to spend more time in the office in pursuit of furthering their careers. But, in fact, the percentage of women that took parental leave actually increased to 92.8%.

One might conclude that, when given the freedom to choose, men and women do what they want to do, following their baked-into-the-bones preferences. Or, as the CEO of Humanyze apparently thinks, these are preferences that can be corrected with a little dose of force.

 

 From My “Work-in-Progress” Basket

Breaking Big: How My Ready-Fire-Aim Strategy Took One Company From $8 Million to More Than $1 Billion

Introduction

In 2010, John Wiley published a book I had written several years earlier called Ready, Fire, Aim. Of the 20+ books I’ve written on business and wealth building, Ready, Fire, Aim has had the longest tail. Although it barely made it to the bestseller lists that year, it has sold conti nuously since then.

The tail was also wide. It’s been republished in more than a dozen countries, recommended by dozens of digital newsletters and magazines, and has been used in business schools, book clubs, and even churches!

My goal with Ready, Fire, Aim was to explain my theory about starting and growing entrepreneurial businesses.

My thesis was that all entrepreneurial businesses have some commonalities in terms of the challenges they face at various stages. And I argued that if you, as an entrepreneur, recognize those commonalities,  you would have a significant advantage over your competitors and a favorable chance of success.

In looking at the way businesses develop over time, I identified four levels of business growth, based on revenue:

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Notes From My Journal 

An Interesting Angle on Teamwork

 Delray Beach, FL– You don’t have to be friends with your teammates. You just need something that Michael Bar-Eli calls task cohesion.

According to Bar-Eli, when a team has a high level of task cohesion, each member will do whatever it takes to reach that goal as a group, even if it means sacrificing their own self-interest. In Boost!: How the Psychology of Sports Can Enhance Your Performance in Management and Work, he gives the example of the Bayern München soccer team in the mid-1970s. Members of the team were far from friends. And yet, on the field, they were all perfectly united in what they wanted to accomplish. As a result, they won three consecutive European Championships between 1974 and 1976.

 

 From My “Work-in-Progress” Basket

Creating a Culture of Profit

You own four businesses in the same industry. They have the same sort of products. The same access to marketing intelligence. And they have unlimited access to cash. Three of them have been steadily growing their profits. One has not.

So you devote extra time and energy to that business. You work with the key people. You suggest ideas, make introductions, etc.

You feel certain that they are all working hard and with integrity. But even with your assistance, the bottom line is always red.

You wonder: What’s going on?

I have a theory about that…

It’s untested. It may be wrong. But it may be right.

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Notes From My Journal

Get Better by Todd Davis

Delray Beach, FL–I purchased the book because I liked the title – Get Better: 15 Proven Practices to Build Effective Relationships at Work.

It seemed like it was going to be the sort of book that contains observations and advice that are sensible but not remarkable. Like it was going to be a book made by taking a listicle and expanding each bullet into a chapter.

And that’s what it turned out to be. Not a bad book. But one that could be scanned (rather than read word-for-word) without fear of losing much.

Below, you can see seven of its ideas along with my reactions…

Idea #1: To be a good relationship builder you must start by identifying the various roles you play, both within your business and in your personal life.

Me: Half right. Building a good life requires that sort of thinking. Building a business affects your personal life (and vice versa), but there’s no rule that you have to pay attention to it.

Idea #2: Learn to differentiate between non-important urgencies and those that matter greatly in the long run.

Me: Yes. This is extremely important in terms of personal productivity and achieving goals. I’m not sure why the author included it, since it’s only marginally related to relationship building. But, yes, very important.

Idea #3: Focus on collaboration, not competition, by thinking how everyone can benefit.

Me. Yes. Competition has its place in business, but cooperation is much stronger and much longer lasting.

Idea #4: Become a good listener.

Me: I hate this advice. But I think it’s true. So long as by being “a good listener” you mean listening so that you understand what is being said (and not being said) with the goal of advancing the business relationship, not taking care of the other’s psychological needs.

Idea #5: Work hard to make your employees feel that you trust them.

Me: Yes… unless you don’t. If you don’t trust them, get rid of them.

Idea #6: Promote a safe and respectful work environment.

Me: This is a good thing to do if by “safe” you mean that people feel safe to work hard and contribute to the business. If you take “safe and respectful” to mean they don’t have to worry about getting their feelings hurt, you are focusing on the wrong thing. Every hour you spend dealing with gender pronouns, for example, is an hour better devoted to creating profits.

Idea #7: Learn not to react too quickly. Learn to mull things over before you respond.

Me: Right. I wish I could have learned to do that. I managed to grow my businesses without this skill, but it is something that would have helped me. I’m working on it and probably will continue to work on it till I fall over.

 

From My “Work-in-Progress” Basket

Can You – Should You – Value Knowledge in Dollars and Cents?

I try to limit my wealth-building and business advice to what I know to be true from experience. That’s because I am skeptical of advice derived solely from thinking.

When I first began to read business books, long after I’d retired the first time, I was surprised to find that many of the bestsellers were authored by academics who had no actual experience. Their arguments were sometimes convincing. But most often they were not. They contradicted the lessons I’d learned.

As for books and speeches and essays about investing, some of them, like Warren Buffett’s advice, made great sense. And those were based on experience. The others, based on theory, were sometimes persuasive. But when I put the advice to work I was almost always disappointed.

All that is to say that I want to discuss a theoretical issue today. If you have my bias towards experience-based knowledge, this may seem like bullshit to you. But I think it’s actually very important. So here it is…

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Notes From My Journal 

The Economy Is Looking Good: Don’t Get Giddy… or Scared

Delray Beach, FL– There are lots of reasons why many people today are excited about the investment markets.

For the first time in 10 years, for example, the GDP growth rate is higher than the unemployment rate.

We are seeing the strongest expansion of manufacturing activity since May 2004, according to the WSJ.

Wages are rising. Not much in real terms, but more than we’ve seen since the last recession.

And according to several sources, consumer confidence has rarely been higher.

For some investors, Len Zachs (of Zachs Investment Research) argues in a recent report to his clients, this sort of economic environment creates a perilous paradox.

Some will see data like this as a signal to go all in – i.e., to put all of their spare change into the investment markets. Many, feeling emboldened by the “good” news, will take more risk, getting into speculative investments like low-cap stocks, mining stocks, hedge funds, start-ups, etc. And a smaller number will see it as scary. Fearing that we may be at the top of an investment cycle, they will sell their stocks and other holdings and retreat to cash.

None of these reactions is smart, says Zachs. “Investors should not see the current strength in the economy as a rationale for doubling down on risky ventures, and they should not see the market at all-time highs as a rationale for staying on the sidelines.”

“Instead of focusing on big returns in short periods of time, or trying to time your entries and exits into the market,” he says, “focus on the long-term and on key economic indicators that can help you stay level-headed.”

This has been my approach since I began to write about wealth building 20 years ago. After losing good money a few times by following my gut, I began to question the wisdom of trying to beat the market. I was pretty sure I couldn’t do it. Could anyone?

The answer was yes, but only for a given period of time. And since you can’t know when an analyst that’s been hot for years will suddenly go cold, I decided to step out of the “market timing” game.

The foundation of my current stock strategy is very safe and very long term. (And yet it’s done remarkably well over the short term as well.) I call it Legacy Investing.

 

From My “Work-in-Progress” Basket

That Was Then, This Is Now (but It’s Still About Then)

South Side High School’s Class of 1968 had its 50th-year reunion last weekend. About 75 of the 300 students in our class attended.

I wasn’t going to go. Then I decided to do it, but feared it would be an emotional disaster.

South Side High had a very stratified social order. At the top were the Chosen – affluent kids that arrived at school well dressed and confident. They came from good families, lived in beautiful homes, and dominated the school’s academic and social functions.

Below them were the Disposables – kids that came to school rudely dressed, emotionally unpredictable, and financially embarrassed. They (we) came from good to not-so-good families, lived in modest homes, and starred in sports but played secondary roles in every other school activity.

Finally, there were the Invisibles, representing perhaps 50 of the 300. Mostly minorities, they dressed better than the Disposables, lived in the projects, and, like the Disposables, had little interaction with school activities. (Except for sports.)

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Notes From My Journal

The Lessons of History

Delray Beach, FL– On the recommendation of Tim Ferriss, I’m reading Will and Ariel Durant’s The Lessons of History. Published in 1962, it contains the occasional paragraph that seems chronologically quaint. But the sentences are lovely. The tone is pitch perfect. And it is dense with wise thoughts and observations.

A few tidbits:

* We are all born unfree and unequal: subject to our physical and psychological heredity, and to the customs and traditions of our group; diversely endowed in health and strength, in mental capacity and qualities of character.

* Inequality is not only natural and inborn, it grows with the complexity of civilization.

* Society is founded not on the ideals but on the nature of man.

* Puritanism and paganism – the repression and the expression of the senses and desire – alternate in mutual reaction in history.

* The concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution.

* Economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive recirculation.

* Monarchy seems to be the most natural kind of government, since it applies to the group the authority of the father in a family or of the chieftain in a warrior band. If we were to judge forms of government from their prevalence and duration in history we should have to give the palm to monarchy; democracies, by contrast, have been hectic interludes.

* If progress is truly real despite our whining, it is not because we are born healthier, better, or wiser than infants were in the past, but because we are born to a richer heritage, born on a higher level of that pedestal which the accumulation of knowledge and art raises as the ground and support of our being.

 

From My “Work-in-Progress” Basket

Every Problem Should Have a Simple Solution

On August 15, I published an essay titled “Growers and Tenders” in which I suggested that there are two kinds of employees. I wrote:

This is an exaggeration, but I like to say that, in business, personalities can be divided into two camps: those that value growth and those that value order.

Those that value growth (the growers) want to make everything bigger. Those that value order (the tenders) want to make everything better. And you need both to enjoy unstoppable success. But the ratio depends on where in the business lifecycle your company is.

This idea is, of course, a simplification. But there’s nothing wrong with that. In business (as in almost any context), simple ideas are almost always better than complicated ones because:

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Notes From My Journal:  

This Actually Happened

Delray Beach, FL– We were talking about sexual harassment. Sally and Leslie and I. Sally said, “At my age, I could use a bit of it now and then. Leslie laughed, agreeing. “I’m way short on that kind of attention,” I admitted.

“Bernie used to harass me,” Leslie said seriously. “He used to come up behind me and rub my shoulders as I worked.” Bernie was her boss. And my partner.

“He did that to me too,” I said. “I took it as a fatherly thing. He did it to lots of people, including his kids.”

“It felt creepy,” Leslie said.

So there you have it. I have no doubt that it felt creepy to Leslie. I’m sure she was subject to various levels of sexual harassment during the years she worked for us. This was 30 years ago.

But I don’t believe Bernie was sexually harassing her. I believe he was doing to her what he was doing to me. I believe he saw it as an avuncular gesture, one of warmth.

I could be wrong. He could have had different motives depending on whose shoulders he was rubbing. I just don’t believe that.

Many would say that what he meant doesn’t matter. It’s how she felt that counts. And it does count. But that doesn’t mean it’s true.

These days, I wouldn’t think of rubbing a woman’s shoulders – any woman’s except K’s. But I’d have no compunctions about doing the same thing to a man. And what if he felt it was creepy?

Leslie never said anything to Bernie. And that was probably at least in part because he was her boss and, as her boss, had a certain “power” over her. But that power didn’t extend to prohibiting her speech. Though it made it more difficult. More risky.

Bernie is gone now so I can’t ask him about it. Neither can Leslie. We will never know. Leslie will carry that creepy memory with her. And I will live with my doubt.

 

From My “Work-in-Progress” Basket

Elegant Solutions*

In his book In Pursuit of Elegance, Matthew E. May tells a story about Drachten, a Dutch village that had a serious problem with traffic at its main intersection. The village hired an expert, Hans Monderman, to help them reduce congestion and accidents.

The conventional way to do this is to implement various measures to get cars to slow down. Unfortunately, such measures – including stoplights, radar-controlled equipment, and a beefed-up police force – are expensive. Since Drachten had a small budget, Monderman was forced to do something different.

He realized that this was an opportunity for him to test a theory he had been developing about human behavior: that the more controls you impose on people, the less self-control they are likely to exhibit. In his words, “Treat people like zombies and they’ll behave like zombies. But treat them as intelligent, and they’ll respond intelligently.”

So instead of increasing traffic controls in the middle of town, he reduced them to a startling degree. Instead of adding regulations, he suggested repealing most of them. No speed bumps, no speed limits, no signs, no mandates about right of way.

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Notes From My Journal 

A Passing Jealousy

Delray Beach, FL– Walking to my office, a woman passes me, going the other way. She is attractive. Tall, lean, and handsome. And I notice that she is dressed attractively too, in a linen skirt and matching jacket.

She pays no attention to me. She is looking ahead, walking with a confident gait, speaking animatedly into her phone. I hear one phrase: “I mean… you can’t wear it all at the same time, can you?”

And that sends me spiraling into that existential despair. No, not despair. More like ennui. No, not ennui. But a pang. A reminder of how much I’m missing.

“I mean… you can’t wear it all at the same time, can you?”

I’m not judging her, as they (imprecisely and insistently) say these days. I’m jealous of her. Truly.

She is living in a world I do not, have not, and never will inhabit. Yet it’s a full world and it seems to me to be in many ways a happier one than mine.

I try to imagine what things in life I loved that much – what material objects gave me such pleasure that such an idea would have occurred to me.

I am a little sad that I have never felt that way: that I wanted to have it all but at the same time.

Of course, that world is entirely open to me. I have only to wish to enter it to become a denizen. Why don’t I?

 

From My “Work-in-Progress” Basket

The Miracle of Compound Knowledge

I have a little gift for you. A simple idea that can mean the difference between struggling and being immensely successful. It is a very small idea that will be worth a great deal to you if (a) you really understand it, and (b) you make it a part of your life.

The idea in a nutshell: Knowledge is a form of wealth. Like wealth, it provides dividends if it is invested. Over a long period of time, those dividends compound. Eventually, they become gargantuan.

Let me explain.

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Notes From My Journal 

More on Caring Less: The Questionable Virtue of Restraining Desire

Delray Beach, FL-“The discipline of desire is the backbone of character,” wrote Will & Ariel Durant.

That’s different from the Buddhist idea of extinguishing desire. The difference is profound. And it says something about two different worldviews.

The Durant idea is very Western, very Christian – almost Puritanical. It is about self-restraint. About reining in one’s natural impulses. This is a view that sees desire (and the temptations that come from desire) as inherent to the human condition.

The Buddhist idea is about letting go. It is about giving up desire. Energetically, it is the opposite of restraint. It assumes that desire is extrinsic to the self – that the self can be separated from desire.

For the Durants, life is a struggle to resist one’s inherent desires, and the effort to resist builds moral muscle. A good or virtuous person is one who strongly and continuously resists temptation.

For the Buddhist, extinguishing desire (caring less) is not about character but about wisdom.

Let’s say K and I agree that we will go to the Norton Museum Saturday afternoon. I know there is a possibility that we may not go. Still, I allow myself to look forward to the trip. Saturday arrives and K tells me she cannot go. I am disappointed, on the verge of anger. I want to blame her, which will cause a fight and more pain. So I control myself. I restrain the desire I have to act out. I behave myself. I behave like a person of good character.

But if, instead, I take the Buddhist path, I do not attach myself to the prospect of going. While scheduling the event, I consciously detach myself from the anticipation of it. I allow myself not to care. By doing so, I spare myself the possibility of pain if it turns out we cannot go, while not diminishing in any way the possibility of joy.

 

From My “Work-in-Progress” Basket

Collecting: The Best Way to Satisfy Your Inner Material Girl (or Guy)

I’m a big fan of rewarding yourself whenever you’ve made significant progress on any of your long-term goals – especially your wealth-building goals. If, say, you get a raise, start a new side business, or negotiate a great deal on a piece of income property… you should give yourself a present.

For some people, that could be a gourmet dinner or a weekend cruise. For others, it might be an expensive toy – maybe a designer watch, a wave runner, or a motorcycle. I’m not against vacations, toys, and dinners. They make life (and hard work) grand. But today, I would like to make an argument for another kind of reward – one that is tailor-made for wealth builders.

I’m talking about collecting.

How good is it? Let me count the ways:

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Notes From My Journal 

Hiring Creatives? Standard Practice Doesn’t Work

Delray Beach, FL– He needed a new editorial director. I asked him how the search was progressing. He said that someone was “currently reviewing resumes” for him.

That worried me.

Because when it comes to hiring members of your creative team, you are not looking for a specific set of skills. You are looking for superstars and potential superstars. And for them, conventional recruiting methods don’t work.

Academic credentials mean nothing.

Resumes don’t mean squat.

Relevant work experience is generally overrated and problematic. (Superstars are usually treated like superstars and therefore rarely appear in the job market.)

And re the initial review process… you have to be careful. You don’t want a sensible person doing that. They will cull out the “unqualified” and the “oddballs.” But superstars and potential superstars are usually both… so you have to make sure the reviewer understands what you are looking for.

What are you looking for?

You’re looking for temperament and talent. Someone who is very smart. And naturally contrarian. Also, someone that can play well with others.

You’re not looking for good. You’re looking for great.

 

From My “Work-in-Progress” Basket

Principles of Wealth: #19 of 60*

There are two ways that investments can build wealth. One is by the generation of income. The other is through appreciation – an increase in the value of the underlying asset.

Certain asset classes are inherently structured to increase value by generating income (e.g., bonds, CDs), while others increase value through appreciation (e.g., “growth stocks” and entrepreneurial businesses). But there are also many asset classes that provide both income and appreciation. The prudent wealth builder will likely have all three types of assets in his holdings, but he will favor those that provide both income and appreciation.

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