Super Crunchers: Why Thinking-By-Numbers is the New Way to be Smart by Ian Ayres, Bantam, 272 pages, $25.00 Hardcover, August 2007, ISBN 9780553805406
Computer technology has had an undeniable impact on our decision-making. Netflix can recommend a movie and eHarmony will recommend a mate. All of this is based on custom formulas and using a mathematical tool called regression to predict what (or who) you will like. Capital One uses regression to determine what interest rate might tempt you into accepting an offer. The Internet radio service Pandora brings in musicians to analyze music so that when you pick a favorite artist on their site, they can play tunes that sound similar. The journey from punch cards to petabytes has given rise to a whole new set of capabilities and Ian Ayres gives a great snapshot of the current state of digital decision-making in his new book, Super Crunchers.
One tool Ayres talks about is randomization. The medical community uses randomization extensively in the testing of new pharmaceuticals. Larry Katz, a former chief economist for the Labor Department, found that by providing job search assistance to the out-of-work, people found jobs faster and the federal government could reduce payment of unemployment benefits by two billion dollars. The same type of number crunching can even be used to prove if basketball players are shaving points at the end of game to cause their team not to cover a point spread.
One of the more unusual and innovative ways computer number-crunching has been put to use comes out of Hollywood. Dick Copaken, formerly a successful Washington lawyer, set his sights on the movie industry. In particular, he and his mysterious team at Epagogix study the effect a script has on box office returns. The folks at Epagogix have come up with a number of components in a script that they have “weighted” and applied certain dollar amounts to. The formula is secret, but unbelievably accurate, and several studios are quietly using their services.
Not everyone is jumping on board though. Ayres tells a story of Copaken arranging a meeting with two hedge fund mangers and a studio head. The hedge fund managers were interested in putting strong financial backing behind a few movies, requiring that Epagogix’s formula be applied to the optional scripts. The studio head, fearing he’d lose his standing in the industry if he did something so radical, declined the money and opportunity. The hedge fund managers, surprising Copaken, were delighted with the meeting. They told him: “what you just showed us here in Hollywood is a ten-lane paved highway of opportunity. It’s like they are committed to do things the wrong way and there seems to be so much energy in the culture and commitment to doing it the wrong way, it creates a fantastic opportunity for us that is much more durable and enduring than anything we’ve ever seen.”
Ayres’ main point is this: intuition is great, but our decision-making can be enhanced by using the combined experiences of thousands or millions of events. Super Crunching lets us see things we normally couldn’t. We should think of these computational tools as looking through a telescope rather than being sold snake oil. Super Crunchers is one of those books that lifts the veil and exposes just how technology and data can and does affect your day-to-day.
August 24, 2007
Jack Covert Selects: Super Crunchers
August 23, 2007
Jack Covert Selects: All the Tea in China
All the Tea in China: How to Buy, Sell, and Make Money on the Mainland by Jeremy Haft, Portfolio, 224 Pages, $25.95 Hardcover, June 2007, ISBN 9781591841593
Jeremy Haft does not believe that China is the evil empire. He believes instead that China represents a boom for business. All the Tea in China tells how Haft learned to do business in China and practical advice on how to tap into this growing market. Every page is ripe with anecdotes revealing how he believes Chinese business culture operates:
Thousands of years of Chinese jurisprudence, then, dealt solely with punishment of crimes, meted out by fiat. There is an old saying in China: ‘Heaven is high, and the emperor is far away.’ Meaning: ‘Do whatever you can get away with.’ Despite the best efforts of China’s government to adapt to a system ruled by laws, this lawless attitude is still commonplace in China business practices today.
And from there he delves into the meat of doing business in China. Included in the book are chapters on: Getting Started, Reading the Market, Orienting Yourself, Buying from China, Selling to China and Competing with China.
Unlike some of my favorite books on this subject, such as The Travels of a T-Shirt in a Global Economy, which tells an outstanding story but isn’t a guide to business, this is a book loaded with practical take-to-the-bank advice. Not to say that All the Tea in China is without its levity and spirit, though; in fact, what really sets the book apart is the author’s sense of humor. Stories of factories that disappear during the night, of factories he was told complied with all the requirements but, when he visited, had no roof, or of international standards and practices (“Do you use GAAP? Sure, I wear their khakis”).
Books on China are a dime a dozen, nowadays, but Haft’s All the Tea in China is one of the best of the bunch.
links for 2007-08-23
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Now the term is proudly embraced, as demonstrated by “How I Became a Quant,” which collects 25 mini-memoirs of academics who successfully made the jump to Wall Street. Quantitative finance might have lost a little of its luster in recent weeks with the su
August 22, 2007
Reading For Firm Founders
The Small Business Special Section of Monday’s Wall Street Journal featured recommended reading from Nitzan Shaer, entrepreneur-in-residence with IDG Ventures in Boston. The focus of his recommendations was to show entrepreneurs where they might look for inspiration to stay focused and preserve.
Here are the books and resources he recommended. Click through on the WSJ link to read Shaer’s comments.
- Long Walk to Freedom by Nelson Mandela
- The Lessons of History by Will Durant and Ariel Durant
- The Innovator’s Dilemma by Clayton Christensen
- Crossing the Chasm by Geoffrey Moore
- The Last Lion: Winston Spencer Churchill: Alone: 1932-1940 by William Manchester
- Shackleton’s Way by Margot Morrell and Stephanine Capparell
- Mao’s Last Dancer by Li Cunxin
- TechCrunch
- Apollo 13 (the movie)
- An Inconvenient Truth (the movie and the book)
August 21, 2007
Fall preview: The Art of Woo
When the entire office completed our StrengthsFinder 2.0 assessments, we were quite surprised by some of the strengths that emerged. We expected certain outcomes; for instance, Kate had “achiever,” Todd had “futuristic.” But everyone nearly fell of their seats when Jake, our former shipper and receiver and now customer service rep, told us that “woo” was one of his top five strengths.
According to StrengthsFinder*, “woo” stands for “winning others over.” If you’re a woo-er, “you enjoy the challenge of meeting new people and getting them to like you….Not only are you rarely at a loss for words; you actually enjoy initiating with strangers because you derive satisfaction from breaking the ice and making a connection.”
Diving deeper into the description, it made sense to us that our vegan, fro-sporting mover of books possessed these qualities. It’s funny–perhaps we had an old-fashioned, Austen-esque notion of “woo” in our minds, of the suave hero winning over the stubborn yet vulnerable heroine.
Given the great success of Gallup’s online assessments, it’s really no surprise that I received an October title called The Art of Woo: Using Strategic Persuasion to Sell Your Ideas, by G. Richard Shell (Bargaining for Advantage) and Mario Moussa.
Shell and Moussa define woo as:
It is a relationship-based persuasion, a strategic process for getting people’s attention, pitching your ideas, and obtaining approval for your plans and projects. It is, in short, one of the most important skills in the repertoire of any entrepreneur, employee, or professional manager whose work requires them to rely on influence and persuasion rather than coercion and force.
The Art of Woo lays out a step-by-step plans for identifying and using a persuasion technique to carry out a strategic initiative. 
For instance, one way to persuade might be to “Put Your Heart into It” — show that you truly believe in what you’re saying. Or, you might “Build Bridges with Analogies and Metaphors” — make decision-making easier by illustrating a point with a story or concept your audience is already familiar with. The authors introduce six other persuasion pathways to success.
The book also includes the authors’ own stories of advising leaders, as well as stories about famous people–Nelson Mandella, John D. Rockefeller, Bono–who used the strength of woo to accomplish extraordinary feats.
*The StrengthsFinder version of “woo” actually appeared first in Now, Discover Your Strengths by Marcus Buckingham and Donald Clifton. We just happened to find out that Jake is a woo-er through the StrengthsFinder 2.0 assessment.
August 20, 2007
Ending
From Robert Townsend’s classic book Up The Organization comes this beauty. For those of you that haven’t read the book or forgotten it, it has short alphabetical chapters and the chapter called “Killing Things, V.P. in Charge of” comes:
It’s about eleven times as easy to start something as it is to stop something. But ideas are good for a limited time–but not forever.*
* Dr. Robert Sobel, Associate Professor of History at Hofstra University says that the British created a civil-service job in 1803 for a man to stand on the Cliffs of Dover with a spyglass. He was supposed to ring a bell if he saw Napoleon coming. The job was abolished in 1945.
What Have You Been Reading?
Happy Monday!
Milwaukee is rainy and overcast as it was much of the weekend. The weather is reminiscent of early fall rather than mid-August.
With many summer vacations taken, we thought we would ask people what they have been reading. If your beach bag contained a business book, that’s great, but feel free to share whatever titles had your attention.
August 17, 2007
More of Zook and Others
I have found some supplemental reading to our recent Unstoppable podcast. Chris Zook (Unstoppable) has been writing a blog for Harvard Business Online.
The online site has recruited Bob Sutton (No-Asshole Rule, Hard Facts), Sylvia Ann Hewlett (Off-Ramps and On-Ramps), and Michael Watkins (First 90 Days) among others.
August 16, 2007
links for 2007-08-16
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In “Three Signs,” Mr. Lencioni tackles the question of why so many people are unhappy at work. The issue is a hot one in management-consulting circles, with many companies citing high employee turnover as one of their biggest problems.
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“Gigerenzer is not nearly as clever a writer as Gladwell, a star at The New Yorker, but the new book does serve as a useful and clearly written tutorial on decisions and how to make them.”
August 15, 2007
You Can't Win a Fight with Your Client
Tom Markert, the author of You Can’t Win a Fight with Your Boss, yesterday came out with another little book of encouragement and advice, this time for the hard workers who deal with keeping clients satisfied. It’s called You Can’t Win a Fight with Your Client: & 49 Other Rules for Providing Great Service. Each “rule” is a short entry on how to manage your relationships with clients – large accounts or small.
We pride ourselves on great customer service; in fact, it’s one of the few things that makes our company stand out in such a competitive market. So it came as no surprise, as I paged through it, to find that we’ve already implemented much of Markert’s advice. For instance, these three rules resonated with me:
Rule 10: Be a Client Advocate
Rule 28: Speak the Truth
Rule 36: Find Ways to Make Their Lives Easier
I especially liked the entry for Rule 46: Roll Up Your Sleeves.
There is no work that is beneath anyone. If a project needs to get done for a client and there is no one at the right level to do it, then roll up your sleeves and tackle it yourself.
Jumping in on a project or task that is not yours demonstrates leadership and commitment.
Your staff will see you doing it and will take in a valuable lesson. And of course the client will have a better experience with the company because the work got done. Everyone comes up a winner.
And in the same style as You Can’t Win a Fight with Your Boss, Markert ties in clever ways to present his message: Rule 13: Win Over Frosty; Rule 14: Be Switzerland; Rule 43: Get Sticky.
