800 CEO Read

February 20, 2012

What Kind of Listener Are You?

Filed under: Uncategorized — Sally @ 4:32 pm

Every morning when I drop my 6-year-old son off for school, I remind him to put on his listening ears. It is quite adorable when he reaches a hand up to each ear and “clicks” them into place. Of course this ritual of ours is more about reminding him to follow directions given by his teacher than teaching him social attentiveness. And yet, it plants the seed that what other people say matters. It is the very beginning step in helping him become a good listener.

Listening is a big deal, at any age, but unfortunately you can’t just click on your listening ears in order to be good at it. Good listening takes practice. It takes self-awareness. It takes a book like Power Listening: Mastering the Most Critical Business Skill of Them All by Bernard T. Ferrari, available from Penguin Portfolio on March 1, to help you understand just how valuable listening skills are…or how detrimental it is to not refine yours.

What sets this book apart from other books on listening (of which there are plenty) is that Ferrari, a business consultant with a long history at McKinsey & Co and also as a health care provider, is interested in “listening for the purpose of arriving at a better business decision.”

Why is listening critical to business success? Ferrari makes his case:

Listening can well be the difference between profit and loss, between success and failure, between a long career and a short one. Listening is the only way to find out what you don’t know, and marks the path to making good decisions, arriving at the best ideas. If you aspire to be better at your job, no matter what it is, listening may be the most powerful tool at your disposal.

Of course this makes sense to all of us. And there is hardly a one of us who would readily admit that we are poor listeners! So it makes sense to jump into Ferrari’s book at Chapter 2, “What Kind of Listener Are You?” to help you determine your own starting point on this journey to become a better listener.

The Opinionator has a “tendency to listen to others really only to determine whether or not his ideas conform to what the Opinionator already knows to be true”?
“The Grouch is blocked by the certainty that your ideas are wrong.”
“The Preambler’s windy lead-ins and questions are really stealth speeches, often designed to box his [conversation partner] in.”
“The Perseverator may appear to be engaged in productive dialogue, but if you pay attention, you might notice that he’s not really advancing the conversation.”
The Answer Man “is the person who starts spouting solutions before there is even a consensus about what the challenge might be, signaling that he is finished listening to your input in the conversation.”
“The Pretender isn’t really interested in what you have to say.”

Even if you consider yourself to be a good listener (and Ferrari says you likely are…sometimes), you may see a number of these archetypes at play in your behavior depending on the situation. I know I can be quite the Answer (Wo)man when talking with my husband, while I picked up some bad Opinionator habits during my years in academia where opinions are highly encouraged that I use clumsily in social situations.

Ferrari sets a high bar in Chapter 4 with his version of the “80/20 rule,” a goal we can all work toward:

My guideline is that my conversation partner should be speaking 80 percent of the time, while I speak only 20 percent of the time….I can make my speaking time count by spending as much of it as possible posing questions, rather than holding forth with my opinions and observations.

What an incredible challenge it would be to just do that! And quite counter-intuitive for many of us in the workplace, Ferrari acknowledges.

I understand that people in leadership positions feel a certain pressure to steer or direct or control conversations within their organizations, but don’t be misled: Your choosing to listen more than speak does not mean you’ve ceded control of a conversation. Well-directed questioning and minimal but well-timed commentary can help people bring forward new facts, open their minds, think in new ways, and come up with better ideas.

By the end of Power Listening, you will better understand how to make the most of your 80/20 by learning how to challenge assumptions, focus on what you need to know, increase your tolerance for ambiguity, create an imaginary filing system for information, know when to stop the conversation and start acting, be a good listening influence. Ferrari’s handy concluding chapter “What to Do on Monday Morning” that turns theory into action steps.

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February 17, 2012

Friday Links

Filed under: Friday Links — dylan @ 11:17 pm

Inspired by a new tumblr called The Composites that uses law enforcement composite sketch software to crank out drawings of literary characters, I’ve decided to use this Friday Links to share some illustrations I’ve done of just a few of the authors we’ve linked you up with over the past year in our general manager Jon Mueller’s ongoing series of blog interviews. I have included a quote from each, and if you’d like to read the interview in its entirety you will find the link on the author’s image or name.

“Creativity is natural and abundant, the natural human state. We are creative beings. Being creative is not the hard part. The hard part is figuring out how to marry creativity to discipline so that the discipline amplifies the creativity, rather than squelching it. Truly great entrepreneurs do not just have a great idea (and often, they copy their ideas from others).” —Jim Collins

“Honestly, I’m not obsessed with the platform, I’m obsessed with the end result. If you can speak to your clients face-to-face or on the phone every day, I’m thrilled with that. [But] we’re more interested in texting than picking up the actual phone. If you look at the consumer, it’s changing. It’s kind of like saying if you have all of the bananas in the world and your customers are monkeys, why do you need to feed them different food? You don’t. The problem is the monkeys turning into a rhino. If you don’t have the proper food for that, you’re going to lose.” —Gary Vaynerchuk

“Enchantment is a higher form of persuasion. Persuasion implies a one-time transaction: I persuade you, you do what I want, hopefully you’re happy with the outcome. Enchantment is long-term: I enchant you, you do what you want which is, fortunately, what I want too, and you’re delighted with the outcome.” —Guy Kawasaki

“Brands have become an extension of human facility, whether it is psychic or psychological. The brands we acquire telegraph our beliefs and affiliations, and in doing so, they create intimate worlds inhabitants can mutually understand. I think that any knowledge of culture is impossible now without an understanding of the implications of ‘brand.’” —Debbie Millman

Today We Are Rich is a statement, a declaration of your abundance. There are two kinds of rich: Bank account and Rich In Spirit. The first kind comes and goes, frequently via the business cycle or disasters/windfalls of some sort. The second kind you build up by sharing what you have and making a difference. When you share, then, you are worth something to the world—either as a person or an organization.” —Tim Sanders

“We found in our study that being the most innovative is no guarantee for great performance. The great innovator doesn’t always win. You need to innovate, that’s clear, but only to a certain level (depending on your industry). Beyond that, other things matter, such as scaling innovation. The problem with being first (being very innovative) is that it’s only one side of the coin; you also need to execute, to deliver on your innovations, that’s the other side of the coin.” —Morten Hansen

“When we treat things as if they were free, they tend not to last, because there is no price mechanism to adjust our demand to supply. Hunters in the 19th century treated the buffalo as if it were free and in a span of a few years reduced a population of hundreds of thousands of buffalo to a couple of hundred. Newspapers today have more readers than ever. But if they do not figure out a way to charge their readers for what they read they will go out of business. Employment in the newspaper business has dropped 42% over the last 10 years … But without reporters and editors, the news will not be made.” —Eduardo Porter

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February 16, 2012

A (Quiet) Room of One’s Own

Filed under: Communication,Leadership,Personal Development,Uncategorized — Sally @ 1:12 pm

In a 1929 essay, Virginia Woolf wrote that “a woman must have money and a room of her own if she is to write fiction.” There has been much literary analysis (and some criticism) of this assertion, and, over time it seems her call has been taken up by proponents of nearly every minority facing systemic repression, but in the context of the time, Woolf was being quite literal and pragmatic. Women rarely had space to call their own in which to do their own work. Women belonged to the household, not to themselves.

While I feel a little bit guilty for cribbing Woolf’s famous line for the title of this post–partially because it’s overused, and partially because this is a somewhat lighter topic to which I am applying it–, as I read through Quiet: The Power of Introverts in a World That Can’t Stop Talking by Susan Cain, the phrase came leaping to mind and stayed there. There are a lot of angles to come at Quiet, but I think the practical, in terms of space, is a good place to start.

Cain’s book sets out to show us how and why ‘the extrovert’ has become the American ideal, and for our purposes, particularly in the workplace. She argues that introverts–nearly 1/3 of people– are misunderstood and devalued. In an interview on NPR.org, Cain explains:

“Many people believe that introversion is about being antisocial, and that’s really a misperception. Because actually it’s just that introverts are differently social. So they would prefer to have a glass of wine with a close friend as opposed to going to a loud party full of strangers.

While able to make choices that suit them in their personal lives (no one has to go to a rock concert to hear their favorite music performed live thanks to the Internet), introverts are often forced to work in an environment that doesn’t suit their creative and productivity needs. This can mean that introverts are less likely to perform to the top of their potential. Also from the NPR Q&A:

It’s quite a problem in the workplace today, because we have a workplace that is increasingly set up for maximum group interaction. More and more of our offices are set up as open-plan offices where there are no walls and there’s very little privacy. … The average amount of space per employee actually shrunk from 500 square feet in the 1970s to 200 square feet today.

Our offices at 800-CEO-READ exemplify this in microcosm. The majority of us work just a few yards away from another person with no doors, walls, or windows dividing us. Discussions quickly become group discussion, interdepartmental, no matter the topic, which is a great way to stay on top of vital information and everyone’s mood. But occasionally we have create our own “walls” by putting on a pair of headphones and listening to whatever music that keeps us focused and tuned inward. It’s a way of us saying, non-verbally, “Not now. I need some space.”

Workplace dynamics aside, another danger, Cain says in her chapter “The Myth of Charismatic Leadership” , is that when work only happens in an open office environment, or in team situations, introverts are often unable to share their valuable contributions simply because they habitually think before they talk. And, well, extroverts, are much more used to talking as they think.

If we assume that quiet and loud people have roughly the same number of good (and bad) ideas, then we should worry if the louder and more forceful people always carry the day. This would mean that an awful lot of bad ideas prevail while good ones get squashed…..We perceive talkers as smarter than quiet types–even though grade point averages and SAT and intelligence test scores reveal this perception to be inaccurate.

Cain expounds on what is lost when this myth of the charismatic leader persists in her NPR Q&A:

Introverts are much less often groomed for leadership positions, even though there’s really fascinating research out recently from Adam Grant at [The Wharton School of business at the University of Pennsylvania] finding that introverted leaders often deliver better outcomes when their employees are more proactive. They’re more likely to let those employees run with their ideas, whereas an extroverted leader might, almost unwittingly, be more dominant and be putting their own stamp on things, and so those good ideas never come to the fore.

Cain isn’t making a call for everyone to work behind their own closed door with no interaction with their fellow workers. And her “criticism in the book is not of extroverts at all, but rather of the extrovert ideal.” Quiet is instead a call for equal opportunity for every type of worker, in the same vein that Woolf called for all women and men to have the space in which to do their best creative work.

None of this is to say that it would be a good thing to get rid of teamwork and get rid of group work altogether. It’s more just to say that we’re at a point in our culture, and in our workplace culture, where we’ve gotten too lopsided. We tend to believe that all creativity and all productivity comes from the group, when in fact, there really is a benefit to solitude and to being able to go off and focus and put your head down.

In the Introduction to Quiet Cain includes a brief questionnaire of 20 True/False questions to help readers determine their level of introversion. I took the quiz and not-surprisingly to me, answered True to 17 of the 20 questions, marking me a true introvert. Of course I’ve known this most of my life ever since I took my first Myers-Briggs in college (INTJ, for anyone who is curious) to more recently when I reveled in a weekend day at home during which I sat in the quiet (no tv, no radio, no husband, no child) for 6 hours.

Some of my affirmative answers were to the questions: “I often prefer to express myself in writing”; “I prefer one-on-one conversations to group activities”; “I dislike small talk, but I enjoy talking in depth about topics that matter to me”; “I often let calls go through to voice mail.”

Before reading Quiet, I’d been lately questioning whether my introversion is a weakness. At times I joke about being a misanthrope, but truly I wish public events and cold calls didn’t give me hives. We certainly get enough books passing through the office that talk about how networking is a prime essential for advancement in business. But I’m certainly not alone in my introversion and can take comfort in the fact that success is not dependent on me adapting some new personality. There are any number of deeply successful introverts as history shows. Cain showcases a few in this book trailer:

Cain also proffers examples of introverts who have become successful in realms atypical to the typical introvert. She emphasizes that sometimes the work you choose to do means needing to get out of your own way. She speaks passionately in her book’s conclusion titled “Wonderland”:

Figure out what you are meant to contribute to the world and make sure you contribute it. If this requires public speaking or networking or other activities that make you uncomfortable, do them anyway. But accept that they’re difficult, get the training you need to make them easier, and reward yourself when your done.

The book offers examples of ways to transcend our intrinsic personality types in order to be better communicators and more assertive team members when the situation calls for it. Learn how you may respond, as an extrovert, during competitive vs cooperative games. Learn how the introvert might adjust her tendencies towards distancing herself via a quiet state during a heated conversation.

Throughout the book, Cain isn’t making these observations and assertions without support. Quiet is well-researched and references contemporary neuroscience, psychological research studies, and popular business literature to provide the answers to her own questions regarding her introverted personality. Whether you are an introvert or an extrovert, you will learn plenty about yourself, how you communicate, and how you work–whether you need that quiet room for yourself or not–by reading Quiet.

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February 15, 2012

Best Business Books of 2011 Discussion

Filed under: Blog,Book Awards,Book Reviews — Jon @ 3:25 pm

As part of our ongoing discussion of the best books from our 2011 Business Book Awards, Translator hosted a very special Lab this week, inviting us in to continue this discussion in a public setting. Their Lab sessions are always interesting, ranging from talk of current business trends, new ideas, cultural phenomena and beyond. It was a pleasure and honor to bring the books from our Awards as points of discussion in this setting. Thanks again to those who attended and joined in the conversation!

Each attendee also received a complimentary copy of the Best Business Book of 2011: Jim Collins’ and Morten Hansen’s Great By Choice.

Below is a video where we talk about the winning book from the Sales and Marketing category: Gary Vaynerchuk’s The Thank You Economy.

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February 14, 2012

Big-Hearted Business Books

Filed under: Uncategorized — Sally @ 12:06 pm

In Gary Hamel’s new book, What Matters Now (which we are giving away this week on inBubbleWrap!), he encourages leaders to define a mission that “embodies the values of trust, generosity, and forebearance” no matter how “radical and weird” it seems. But he even goes further and suggests you bring love into the equation.

[H]ere’s an experiment to try. The next time you’re stuck in a staff meeting, wait until everyone’s eyes have glazed over from PowerPoint fatigue and then announce that what your company really needs is a lot more luuuuuv. When addressing a large group of managers, I often challenge them to stand up for love (or beauty or justice or truth) in just that way. “When you get back to work, tell your boss you think the company has a love deficit.” This suggestion invariably provokes a spasm of nervous laughter, which has always struck me as strange.

Why is it that as managers we are perfectly willing to accept the idea of a company dedicated to timeless human values, but are, in general, unwilling to become practical advocates for those values within our organizations?

The problem, as Hamel defines it, is that organizations tend to value utilitarianism, but shy away from valuing values. “[T]his kind of dedication to big-hearted goals and high-minded ideals is all too rare in business. Nevertheless, I believe that long-lasting success, both personal and corporate, stems from an allegiance to the sublime and the majestic.”

Hamel is the author of The Future of Management and the co-author, with C.K. Prahalad, of Competing for the Future. What Matters Now is a multi-tiered look at how organizations must become more adaptable and innovative by tapping into the creative power of their people rather than relying on a more traditional, more inhuman, management ideology.

***

Other books we love that put heart at the heart of the matter?

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February 9, 2012

Jack Covert Selects – Uncommon Service

Filed under: Jack Covert Selects — 800-CEO-READ @ 5:52 pm

Uncommon Service: How to Win by Putting Customers at the Core of Your Business by Frances Frei & Anne Morriss, Harvard Business Review Press, 272 pages, $29.95, Hardcover, February 2012, ISBN 9781422133316

As a service company, when we receive feedback about a negative situation, we immediately act to resolve the conflict and then try to put a process in place to avoid such a thing happening in the future. Most books on service describe ways to do this: how to react to or plan for customer service breakdowns.

Uncommon Service: How to Win by Putting Customers at the Core of Your Business asserts that service is not about reacting, but building customer satisfaction into the business model itself, so that employees and the systems they work within provide excellent service as a matter of routine.

What is surprising about the case stories in Uncommon Service is that the authors focus on how the companies are really bad at something, and how that serviced the great things they did in ways that allowed them to be unapologetic about the bad things. Commerce Bank, for example, chose (proven) nice service people over smart financial service people. The cost of the employees was higher than the super smart ones, so unlike other banks who hired super smart people, Commerce Bank kept their fees high, didn’t budge on them, and banked (no pun intended) that word-of-mouth of their great service would end up making them successful—and it did. The bad (higher fees) serviced the good (awesome service).

As the authors’ explain:

This point is crucial to understanding how to design uncommon service. In our experience, the number one obstacle to great service—number one by a long shot—is the emotional unwillingness to embrace weakness. But it couldn’t be clearer that to win in one area, you must lose in another. Progress requires sacrifice. Some part of your service offering must be thrown under the bus. […] Choosing bad is your only shot at achieving greatness. And resisting it is a recipe for mediocrity.

This is not how most of us think, yet the authors make some very interesting and data-backed observations to support their theory. In typical Harvard Business Review fashion, the book is packed with lengthy case studies, making it an interesting and convincing read that will help you find your opportunity to choose “the bad” while achieving your own uncommon service success.

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Jack Covert Selects – Inside Apple

Filed under: Jack Covert Selects — 800-CEO-READ @ 5:49 pm

Inside Apple: How America’s Most Admired—and Secretive—Company Really Works by Adam Lashinsky, Business Plus, 223 Pages, $26.99, Hardcover, January 2012, ISBN 9781455512157

Apple, one of the most iconic companies of this century, has created many life-changing products (products we mostly didn’t know we needed until they made them, and now can’t live without), yet we know little about the inner workings of this organization… other than what Apple wants us to know.

One thing I found particularly illuminating is Apple’s ability to say no. This company, with over $108 billion in revenue, and 30 years of business, can fit their entire product line on an average-sized conference room table. Their marketing and communications team continually simplifies their corporate message. Found at the bottom of a 2011 Apple press releas:

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.

That is the entire company in three sentences. This is a lesson we all can learn, from limiting our product line to crafting our elevator pitch.

Inside Apple follows through on its promised internal view of this unique company and is particularly intriguing due to the loss of Steve Jobs, Tim Cook’s new position at the helm, the criticisms of its current manufacturing system, and the dominance of i-everything instead of the Mac computer. What will Apple do next? Lashinsky makes it clear that even Apple doesn’t know.

Apple is a company of paradoxes. Its people and institutional bearing are off-the-charts arrogant, yet at the same time they are genuinely fearful of what would happen if their big bets go bad. The creative side of the business … is made up of lifers or near lifers who value only an Apple way of doing things—hardly the typical creative mind-set. The operations side of Apple runs like any company in America, but better, and is led by a cadre of ex-IBMers, the cultural antithesis of Apple. Apple has an entrepreneurial flair yet keeps its people in a tightly controlled box, following time-tested procedures. Its public image, at least seen through its advertising, is whimsical and fun, yet its internal demeanor is cheerless and nose-to-the-grindstone.

Adam Lashinsky is the senior editor at large for Fortune and as such is uniquely qualified “to hack into Apple’s closed world and to decode its secret systems so that aspiring entrepreneurs, curious middle managers, envious rival CEOs, and creatives who dream of turning insights into inventions can understand the company’s processes and customs.” He is also a compelling storyteller whose prose moves quickly and is never dragged down by exclusivity or jargon. At a time when books about Apple are flooding the market, this is the one to read.

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Jack Covert Selects – The Wide Lens

Filed under: Jack Covert Selects — 800-CEO-READ @ 5:45 pm

The Wide Lens: A New Strategy for Innovation by Ron Adner, Portfolio, 231 pages, $29.95, Hardcover, March, 2012, ISBN 9781591844600

Of all that’s been written and espoused on innovation over the past several years, it seems a key consideration has often been overlooked, one that Dartmouth College professor Ron Adner has gleaned from years of studying the subject. Adner has now detailed his findings as well as his prescription for greater success at innovation in The Wide Lens, in which cites many examples of companies that failed to check the “innovation blind spot” of their innovation ecosystem and consequently failed with innovations that should have been wild successes.

In the case of Philips Electronics, the invention of HDTV in the mid 1980s was thwarted by a lack of television programing recorded in HD—cameras and even a broadcasting standard were not yet in place. Sony had a similar blind spot when it developed the first e-reader, only to realize that e-books were not yet readily available for purchase. Ditto Johnson Controls, which developed a new generation of electrical switches and sensors to dramatically reduce energy use in buildings. The blind spot in its ecosystem was a lack of architects, electricians and others willing to adjust their routines in order to specify the new money-saving technology.

Adner writes:

Welcome to the world of innovation ecosystems—a world in which the success of a value proposition depends on creating an alignment of partners who must work together in order to transform a winning idea to a market success. A world in which failing to expand your focus to include your entire ecosystem will set you up for failure. Avoidable failure.

Through more than 10 years of study, Adner has developed blueprints and systems to assess a company’s innovation blind spots, its innovation ecosystem, and its odds of success. The most effective way to set a wider lens, according to Adner, is to create what he calls a Value Blueprint, which identifies the players and intermediaries, clarifies the project and identifies risks and ways to assess and move around those risks. Though Adner acknowledges there will be unseen challenges and unknowns, the Value Blueprint will help take the foreseeable challenges out of a project’s execution.

The Wide Lens opens the readers’ eyes to the bigger picture and expands the mind to the possible pitfalls that have come to stand in the way of the success of many innovative products and services, including vehicle tires that can be safely driven on after a blowout, the electric car, and inhalable insulin. Had a wider lens been employed at the time of the creation of these valuable innovations, the world might be a better place. Don’t miss out on your opportunity to see your innovation go from conception to success by engaging a wider lens.

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February 8, 2012

Sharpen Your Heels

Filed under: Uncategorized — Sally @ 3:38 pm

Mrs. Moneypenny, long-time Financial Times columnist, concludes her book, Sharpen Your Heels: Mrs. Moneypenny’s Career Advice for Women, with this:

One more piece of careers advice.

A final word to all the ambitious women who will read this book. When you get to the top — and if you follow my advice, you will do so — remember to turn round and reach back to help the generation of women behind you.

As Madeleine Albright once said, ‘There is a special place in hell for women who don’t help other women.’

At the risk of ‘giving away the ending’ I thought it was critical to highlight this section because Mrs. Moneypenny is doing just that — reaching back, or rather, reaching out — to women who need a hand up or a way through the obstacles that might appear in their career path. While a common refrain in this book is that a woman can’t have it all even if she is doing it all, she is very clear that women can have success. At any age. By any personal definition.

If you are still in school, or university, or halfway through your career, or even retired and wondering if you have left it too late to try for success, read this book and see if it inspires you. There is no specific time in your career when you will need more, or less, help and support–at every age and at every stage women do better when they have the right ideas, the right focus, and the right advice.

In her signature witty and pragmatic style, Mrs. Moneypenny encourages ambitious women to first believe that it is not too late, whether you are making a career change, coming back to work after giving birth, or even in retirement. Then, she advises: build and utilize your network relationships; learn to say no (even if it means choosing a board meeting over your child’s concert); allocate your time and energy wisely by deciding what matters to you most; become financially literate (you need not be an accountant or MBA to work your way up, but you should be able to talk like one); promote yourself; and ask for help.

Perhaps the most intriguing chapter she offers is titled “The Third Dimension” which is “all about doing voluntary work in order to further your career.” She cautions that some “may find that [suggestion] rather mercenary…” but “[f]inding a third dimension that benefits you, your career, your business or your family in some way at the same time as you are able to volunteer your skills creates a virtuous circle from which everyone profits.”

And so it comes full-circle that Mrs. Moneypenny has dedicated herself to helping other women achieve success both as an example of success–in addition to her work as a columnist, she is a “TV personality, owner of a small successful business, wife, and mother to Cost Centers 1, 2, and 3″– and an author of Sharpen Your Heels.

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February 7, 2012

Paper Promises

Filed under: Big Ideas,Book Reviews — dylan @ 4:43 pm

Our economic lives could literally stop on a dime. All it would take is an agreement redefining what a dime is, or is worth, backed by or tied to. It’s happened before, and The Economist‘s “Buttonwood” columnist Philip Coggan believes it will inevitably happen again as the great international play of creditors and debtors enters its next act.

Coggan, in his new book Paper Promises: Debt, Money, and the New World Order (released today by PublicAffairs), identifies turning points in the history of economies, nations and international affairs by examining the relationships between creditors and debtors. And to do this, it is important for him to identify exactly what money is and has been, something that has changed throughout history as economies rise and fall. This makes for a fascinating story that clears the cobwebs of the past and brings us up to the present day. As he writes: “Given that mankind has been using money for thousands of years, it is perhaps surprising that money is still such a nebulous concept. … Over time, money has been everything from precious metals through paper to entries on a computer screen. One writer defined it quite neatly: ‘Money is the belief that someone will pay you back.’”

What constitutes money and how it is exchanged coincides neatly with the rise and fall of powers. Quoting John Kenneth Galbraith, the author notes that “If the history of commercial banking belongs to the Italians and of central banking to the British, that of paper money issued by a government belongs indubitably to the Americans.” But regardless of what form money takes, it is when that “belief that someone will pay you back” is challenged that matters become especially delicate between debtors and their creditors, and the rules get rewritten. And it is a situation that looks increasingly likely today.

Throughout history, the most popular political reactions to unmanageable debt have been deflation and default—diluting the purity of coinage and devaluing currency to lessen the burden of debt, or simply refusing to pay it back. One great example of the former is Henry VIII, “known as ‘old copper nose’ because of his habit of adulterating silver coins, the base metal underneath showing through the wear.” Similar tactics diluted the silver content of Roman coinage by “96 percent over the course of two centuries.” But repaying debts in debased currency is probably preferable to the outright defaults of some monarchs, such as Philip IV of France:

Philip IV, who ruled from 1285 to 1314, borrowed heavily but forced his bankers into exile rather than repay them. Just to put icing on the gâteau, he then decreed that the principal on all other debts must be repaid to the crown. The result was the ruin of his main creditor, the Order of the Knights Templar.

Of course, exiling your bankers is not an option when debt becomes international. Resolving debt is now a political issue dependent on international agreements. The gold standard was one such (and as the author explains, accidental) agreement, and worked quite well until it was abandoned in the attrition of the First World War. The Bretton Woods system—an agreement in the wake of World War II under which currencies were tied to the dollar and, because the US held 60 percent of the world’s gold bullion, to gold through the dollar—was another. That system was the norm until 1971, when facing a crisis of confidence in the dollar the United States abandoned that agreement and decoupled the value of the dollar from gold.

Since then, currency exchange rates have “floated” on the foreign exchange market. This has increased capital flow, and the financial sector has exploded in size and wealth since. It has also allowed governments to run greater deficits because they can manipulate their currencies more easily. This is the story told in the second half of the book, a story of easy credit and asset bubbles. It is the story of modern finance and the brink of disaster it brought us to that’s been covered so well in so many books of late, here told through the lens of the entire history of money and debt documented in the book’s first half. It is a perspective that makes our current crisis look less unique, even as the author references research done in another recent book entitled This Time Is Different:

Carmen Reinhart and Kenneth Rogoff recount that sovereign default has occurred in a number of waves, starting with the Napoleonic Wars. In the 1840s cycle, nearly half the countries in the developed world were in default. There was a 1870s to 1890s wave, associated with falling commodity prices, and a 1930s to 1950s wave, linked to the Great Depression and the war.

Between the Second World War and the current crisis, sovereign debt was almost always associated with the developing world, and the debate largely focused on how much of that debt should be forgiven for historical reasons or on humanitarian grounds. Today it is the developing world, largely China and the resource-rich nations of the Middle East, that acts as the creditor to developed, debtor nations—the United States the largest among them. But, as we’re seeing in the news everyday now, it is Europe where the real worry is. (Just yesterday the Prime Minister of Romania resigned amidst growing protests over austerity measures there, and his was but the latest government to fall across Europe since the debt crisis began.) Essentially, the current relationship ultimately relies on faith in governments, which is wearing thin across the Western World.

Coggan brings us to this present moment in history with great skill and scholarship, and a steady, masterful hand. He explores the various aspects, implications and possible outcomes of this new paradigm, and believes that “the debt is unlikely to be repaid in real terms.” “The Unholy Trinity” he sees coming down the road is inflation, stagnation, and default, with some sovereign defaults incredibly likely in the Eurozone, and countries that still control their own currencies like America and Britain “partially defaulting” in the sense that they depreciate the value of their currency to make their debts more manageable.

The ultimate solution, however, is where the “New World Order” in the book’s subtitle comes in. This is “where the buck stops,” or at least where it stops floating as it has since 1971. He believes the current arrangement of “floating exchange rates in the developed world and managed rates in the developing world” will come to an end. He sees the most likely outcome being a new agreement between China and the United Stated—the world’s largest creditor and its largest debtor—in which the West agrees to a new system of capital controls as China allows it’s currency to appreciate and America reigns in its national debt.

Nassim Nicholas Talb, the well-known author of The Black Swan, is quoted on the cover saying “This book stands way above anything written on the present economic crisis.” I think there’s a whole library’s worth of brilliant books on the present crisis, and I wouldn’t want to judge a peopled narrative like Andrew Ross Sorkin’s Too Big to Fail against a history of currency and debt like Coggan’s, or put up what I read as a character study (of both people and nations) like Michael Lewis’s Boomerang against a modern financial history like Bethany Mclean and Joe Nocera’s All the Devils Are Here. Coming from a company with a bookseller background, I have a firm belief in matching up the right reader with the right book, and would recommend different books to different people for different reasons. (And if you like this book, I would recommend picking up Menzie Chinn and Jeffry Frieden’s Lost Decades, James Rickards’ Currency Wars and Keith Roberts’ Origins of Business, Money, and Markets to go along with it.)

All that said, I think Paper Promises is not only a great book, it is a great accomplishment—a brilliant work of financial history, an clear examination of the present moment, and a journalistic masterpiece all wrapped into one.

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