Good but not so Great

You may have come across the book Good to Great written by Jim Collins. It's part of the genre of management faddish books that was started by Tom Peters's with his In Search of Excellence. Their common theme is an in-depth research into companies that had been performing well, such work then being publicised in the authors' books which later received rave reviews. Lamentably, a few years later these companies turned out to be duds.

What's wrong with the approach taken by these authors? Mind you, some of them are respected management consultants who have taught at prestigious business schools. Are we teaching business leaders who are only good for the moment but leaving damaging legacies for the future generations, as exemplified by George W Bush, a typical product of such business schools? His leadership records speak volumes on the damage indirectly inflicted by the Harvard Business School on the Middle East.

What the business books (except those written by Peter Drucker) and the business schools badly suffer from is the inability to perceive the right patterns that differentiate the great from the not so great, i.e., the good. The authors did study the track records of the performing companies, no doubt, but the time frame that they used is so short so much so that whatever patterns that they perceive cannot withstand the test of time. These companies, by the way, are only recent creations; 100 years is too short. Hence, they are in no way good models for recognising patterns.

Take Jim Collins. He has used the analogy of the hedgehog and the fox to emphasise the benefits of focus as exemplified by the hedgehog. In his words, the hedgehog is 'a simple dowdy creature that knows one big thing and sticks to it.' Actually this characterisation of the human view of things can be traced to the ancient Greek poet, Archilocus. The hedgehog knows only big thing while the fox knows many things. This analogy was further elaborated by Sir Isaiah Berlin, a British philosopher to categorise thinkers and writers; hedgehogs are those who view the world through one big idea while foxes maintain several perspectives of the world depending on the prevailing conditions.

Hedgehogs see things in black and white. They are dogmatic with their one big thing and will overextend the applicability of that one big thing into areas much remote from its limited scope. Foxes, on the other hand, are pragmatic. They are not bound by one single idea and are amenable to changing their views. Foxes tap on their wide experiences to make an informed judgment.

It's not for nothing that the phrase 'cunning as a fox' or 'sly as a fox' came about. Fox, the animal, has a reputation for intelligence. It has a well developed sense of sight, smell and hearing. It can live in a wide range of habitats including living close to humans.

However, our infatuation with extreme focus has instead glorified the hedgehogs. With their narrow specialisation, they have become the experts, albeit dangerous ones at that because the public has allowed them to influence events and opinions. The Economist dated 18 July 2008 has the perfect definition of an expert: '... someone who knows about less and less until eventually, he knows everything about nothing.' It's time that we take control of our own decisions lest we be the slaves of some dubious 'experts'.

Prof Philip Tetlock of the University of California, Berkeley, has studied the accuracy of the experts' forecasts over 20 years, as documented in Expert Political Judgment. He has found their forecasts to be only slightly better than random guesses. It is our own fault that the 'experts' who see things in blacks and whites are the ones we clamour for. Remember George W. Bush's 'You're either with us, or against us' statement. Such a statement makes for great sound bites. In the real world, however, there are many grey areas with their complexities and nuances. In this regard, foxes make for better judges of events and issues.

I'm not arguing that we should all be foxes. Otherwise, we will succumb to the Western construct of black and white. We need hedgehogs for the short-term objectives of implementing things. But we need to mix the hedgehogs with the foxes. Down below in the organisation, there should be more hedgehogs. As we move up, the proportion of foxes should prevail. The main problem with most organisations is that the hedgehogs who have been good at running organisations in the past are still at the helm when the outside environment has changed drastically. They just are not able to adapt and are perplexed when their business models can no longer deliver the hoped for returns.

Am I for the hedgehog or the fox? Given the expected turn of events, I'm for neither. Not even the eagle, much beloved of many organisations and management writers. Mine is the ANT. I've got strong reasons for it and will be writing on it in the future.

The Book of Five Rings

The Book of Five Rings is a Japanese book on sword dueling techniques. Unlike Sun Tzu's The Art of War, it's not straight forward and there are not many strategies that can be found useful for real life applications.

However, if you have studied pattern recognition, you will find that The Book of Five Rings is essentially about mastering patterns and making them part of you, that is, by internalising them. In a sense, it's the better of the two strategy books.

Take the sword fight. Any novice dueler would need to think where to strike, and if the strike doesn't hit the mark would be analysing why it didn't hit. He's using his prefrontal cortex to process new information. In a sword duel, such split second thoughts lead to certain death. An experienced swordsman doesn't think; every move is intuitive. The parts of his brain that direct his movements are the basal ganglia and the cerebellum. If you have watched The Last Samurai movie, remember that only when Tom Cruise made his movements come out naturally did he manage to master the art of swordsmanship.

How do you master patterns? Only through continual practices. But what distinguishes a master swordsman from an experienced but average one? The master would keep stretching his skills, adding more to his repertoire of sword fighting techniques while the average dueler would be repeatedly practising his limited set of skills. In a duel, the master would not use the same technique all over again if it does not work. He will try something different and in so doing, he triumphs over his opponent. That is the secret of Miyamoto Musashi, the author of The Book of Five Rings.

How Great Generals Win Battles

Great generals like Alexander, Genghis Khan, Frederick, Napoleon, and Patton invested considerable time in planning and in ensuring that their armies were always prepared for battles. But their plans were never cast in stone. It is not necessary for them to lead in battles although some like Alexander did.

The trick is to maintain a helicopter view scanning the battle ground while the battle is in progress but ever vigilant for break-through opportunities. Once an opportunity presents itself often in a fleeting moment, a great general would immediately seize it. The ability to sense whether a situation is an opportunity that should be seized or a one that should be passed up is what differentiates a great general from an average leader.

A fitting example is the biodiesel crap in which many corporations have sunk millions of dollars without any chance of recouping their investments. Pattern recognition would have easily established that it is not an attractive opportunity primarily because its future competitors relying on nanotechnology and biotechnology can capitalise on the technology s-curve that will one day enable them to leapfrog biodiesel's value proposition. Furthermore, the recent high oil price increase were not so much due to peak oil production as to peak money creation which means the high oil prices were transitory.

As for those who cannot even smell an opportunity, they are the foot soldiers who will always be the casualties of battles.

Not Super Power but Super Trouble

China has often been proclaimed as the next superpower by many commentators. This is an ill-informed judgment. A proper pattern recognition would reveal that it is in line for vary bad days ahead. A brief look at China's history is in order. Throughout its history, China has always been infatuated with being solidly unified as one nation. Its writing system reflects such preoccupation. The Chinese have many dialects, each unintelligible to one another, yet these dialects share the same written characters.

However, beneath the seeming tranquility lies stresses that creep up over time. Like the geological earthquake that needs to take place in order to release the stress deep inside the earth, China must every now and then suffer upheavals to dissipate the stress build-up. China's past upheavals occurred in timely intervals of 50 years. Any delaying of the upheaval will ensure that the next will be cataclysmic.

China also was never interested in what the outside world had to offer. It built the Great Wall to keep the barbarians out. Instead it was the outside world that tried to nuzzle its way into China. The Qianlong Emperor of the Qing Dynasty summed up this attitude perfectly in his writing to King George III after receiving Britain's mission in 1793 "Our ways have no resemblance to yours. As your ambassador can see for himself, we possess all things. I see no value on objects strange or ingenious, and we have no use for your country's manufactures". His grandfather, the Kangxi Emperor whose reign of 61 years is the longest in Chinese history, issued a prescient warning in 1717 regarding the British presence in Canton, "There is cause for apprehension lest in centuries or millennia to come China may be endangered by collision with the nations of the West."

Mao Zedong was one leader who perfectly understood China's peculiarities because he was an avid reader of history. He initiated the Great Leap Forward in 1958 and the Cultural Revolution in 1966 to release the tension within the system. Millions died. However both were controlled releases. He could end what he started. Mao was cruel but he achieved his objective, which was to ensure China remained united as a nation. The alternative could have been much worse; possibly a prolonged anarchy had the state fractured.

Deng Xiaoping who succeeded Mao in 1978 embraced free market and opened up to the world. It was a foolhardy decision. Now China has no control over its future. The prosperity that Deng wrought buys respite only as long as it lasts. He had a mild foretaste in 1989 with the Tienanmen Square protests which was triggered by a price inflation. But inflation can be easily tamed compared to the catastrophic oncoming deflation which has practically no remedy.

Capitalism is like riding a bike or spinning a top. Growth that it engenders cannot be allowed to falter. China is now moving fast. Unfortunately it is not on a bike but a runaway juggernaut with failed brakes. The coming crash that we are about to behold wouldn't be an interesting sight indeed.

Wither the EU

The European Union (EU) is an anachronism in a world adjusting to a new paradigm - a paradigm of fracturing of the big into small constituents. The forefathers of the EU did not realise that the EU could only come about because of the past prosperity of its member countries.

It's a common mistake of humankind to frame future actions based on recent past outcomes. One hundred to two hundred years is still recent; to define real patterns, you must go back to one thousand to two thousand years. Had the present leaders been aware of the unfolding pattern, they would have ditched both the EU and the euro. In the meantime, the EU member states would have to endure many gut-wrenching moments while their leaders go about clueless looking for solutions to their economic travails.

Only one solution is clear - BREAK UP THE EU AND DITCH THE EURO.