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November 22, 2011

Truisms collide in the story of Nanovation

Filed under: Bestsellers,Big Ideas,Blog,Design,Uncategorized — bob @ 12:58 pm
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It’s often been told to entrepreneurs and potential innovators: If you want to create something of value and build a financially successful enterprise, find a problem and solve it. A second truism concerning innovation is the workaround, or “incomplete or partial solution to a particular job to be done.” (The Innovator’s DNA by Jeff Dyer, Hal Gregersen and Clayton M. Christensen.)

When one observes a workaround, the authors of The Innovator’s DNA say pay attention because it might provide inspiration to create entirely new products.

Both those truisms of innovation collided one afternoon in 2002 during monsoons. Ratan Tata, the chairman of the Tata Group, an industrial giant in India that makes automobiles among many other things, was being driven through the manic Indian streets in the driving (no pun intended) rain. Before the trip begins, Tata cautions his driver to drive carefully and expect the unexpected. Soon after, Tata notices a family of four on a scooter passing his car, a common site in India.

He again admonishes his driver to slow down and no sooner finishes his warning than the driver of the scooter loses traction and then control, sending the scooter and family tumbling in all directions in front of him. Tata’s driver was able to stop, keeping the family safe but soaked and shaken up.

Tata says his epiphany began as he saw the family begin to pass: There had to be a safer way for families of limited means to travel in an increasingly mobile India. Tata began sketching, thinking and, in the end, decided that enough was enough and that the masses in India needed and deserved a “people’s car” and Tata was the company to provide it.

He tasked a team of more than 500 engineers to design, develop and mass construct the Tata Nano.

In Nanovation: How a Little Car Can Teach The World to Think Big & Act Bold, authors Kevin & Jackie Freiberg and Dain Dunston, tell not only the story of how the Nano was developed, but how the project succeeded despite a spate of setbacks, as one might expect. The tome, topping 500 pages, is a gold mine of thinking on innovation, some of it recognizable, but much of it innovative itself. One of the highlights of the book is its sidebars called Nanobites, containing bursts of insight culled from the Nano story. An example:

  • Nanovation is often born from a desire to make the world better.
  • Nanovation begins with clearly defining the problem.
  • Nanovators see problems as invitations.
  • Nanovation is action-oriented. If you see a problem, act on it.
  • Nanovators frequently ask, “What if?”

The bursts are often followed by questions designed to get the reader to think and apply the Nanobites that preceded them. The questions that followed the Nanobites above:

  • How many times have you looked at a situation in your country or company and thought, Someone should do something about this?
  • What if you were that someone? Or what if you supported someone who shared your vision and was in a position to make a difference?
  • And forget changing the world for a moment: How about in your job? Is there some problem in your workplace or in your industry that you think “someone” ought to address?
  • What would it take for you to lead the change?

In all, the book uses a layman’s language to describe a plethora of useful innovation ideas, many of which will inspire and instruct you. Along the way, you get to read the story of the creation of a safe, low-polluting car that cost about $2,100 American when introduced. The most exciting pages are dedicated to the ripple effects the car will have around the world. For example, global parts vendors were charged with finding ways to lower the costs of their parts by 80% for the Nano. The innovation that those vendors used to accomplish that will be transferred to other manufacturers, lowering the price of cars for buyers in other countries.

 

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November 21, 2011

The Thinkers50

Filed under: Big Ideas,Leadership — dylan @ 8:41 pm
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Congratulations are in order for friend of the company Marshall Goldsmith, one of the really good guys in this business, on winning the 2011 Thinkers50 Leadership Award as the World’s Most-Influential Leadership Thinker.

Now sponsored by the Harvard Business Review, The Thinkers50 is a decade-old, biannual global ranking of management thinkers that uses ten criteria to rank thinkers: originality of ideas; practicality of ideas; presentation style; written communication; loyalty of followers; business sense; international outlook; rigor of research; impact of ideas and the elusive guru factor. Goldsmith has all of those qualities in spades, ranked number seven on the overall Thinkers50 list and was certainly deserving of the award in Leadership he took home.

Business Book Readers will know Marshall from his excellent and highly influential books, most recently What Got You Here Won’t Get You There and MOJO. Friends and followers of the company might remember him from the LeaveSmarter event we held with him here in Milwaukee last year (you can find a video excerpt from that event at the end of this post).

Clayton Christensen, author of The Innovator’s Dilemma, The Innovator’s Solution and, this year, The Innovator’s DNA won the award in Innovaton and was number one in the overall rankings.

And there are other categories and awards in the Thinkers50 as well, including the Thinkers50 Book Award, which Pankaj Ghemawat won for his new book World 3.0: Global Prosperity and How to Achieve It, in which he rejects “flat world” view of the global economy and offer a more nuanced, semi-globalized view.

Other Think50 2011 category winners include:

  • Blue Ocean Strategy coauthors W. Chan Kim & Renée Mauborgne in Strategy
  • Vijay Govindarajan, author of Ten Rules for Strategic Innovators and The Other Side of Innovation, took the Breakthrough Idea Award
  • Lucy P Marcus took home the Future Thinker Award
  • Nirmalya Kumar, author of India Inside, won the Global Village Award

For a complete list of this year’s Thinkers50 and where they all rank, a lot of great video with those who made the list and everyone who made the shortlist for the awards, head on over to Thinkers50.com.

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October 24, 2011

Doing the Right Thing

Filed under: Big Ideas,Book Reviews — Sally @ 5:29 pm
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In 2007, we chose a book called Responsibility at Work as the winner of the Personal Development category for that year’s Business Book of the Year Awards. It was the first time I’d been exposed to Howard Gardner’s work–he is prolific*, so the book we featured was only a small part of his overall catalog–, and I became quite interested in his Theory of Multiple Intelligences. I don’t recall if I’ve ever taken an official IQ test but I can tell you I wouldn’t have done well on it. I’m one of those people with test anxiety which impairs my ability to perform well on tests. It’s a bit like an athlete who doesn’t compete well, I suppose. Some athletes are able to turn anxiousness into energy while others get distracted by it. That’s how I am in any kind of test that needs a right or wrong answer: is it any wonder why I oriented toward the fine arts and Blue Book tests that I could fill out to my heart’s content? So naturally I am drawn to other ways of measuring intelligence. Not only for my own ego, but because most people know full well that human performance is complicated despite our desire to place people in pigeon-holes.

Wikipedia, as always, sums the theory up handily for us, describing the Theory of Multiple Intelligences as “a model of intelligence that differentiates intelligence into various specific (primarily sensory) modalities, rather than seeing it as dominated by a single general ability.” Gardner proposed the following as meeting his criteria for what is an intelligence.

  • Spatial
  • Linguistic
  • Logical-mathematical
  • Bodily-kinesthetic
  • Musical
  • Interpersonal
  • Intrapersonal
  • Naturalistic

Not everyone agrees with Gardner on this list, or even sees a point to the exercise, but Gardner acknowledges that this is truly just a theory, a theory that over time will prove true and/or valuable.

“I’ve put forth a candidate set of intelligences that are said to have their own characteristic processes and to be reasonably independent of one another. Over time, the particular intelligences nominated, and their degree of dependence or independence of one another, will be more firmly established.” HowardGardner.com/FAQ

There are two new books out this month that posit, if indirectly, additions to the above list of intelligences.

Ethical Intelligence: Five Principles for Untangling Your Toughest Problems at Work and Beyond by Bruce Weinstein, aka “The Ethics Guy” on Bloomberg’s Businessweek Online.

Many of us are familiar with Daniel Goleman’s popular book, Emotional Intelligence which focused on “the ability to discern how others are feeling, which can be quite different from the ways they present themselves to the world.” Here Bruce Weinstein draws a distinction between emotional intelligence and ethical intelligence, saying that it is not only important to process the world and its varied situations emotionally, but, then, when you actually have to do something in response, that requires ethical intelligence. “Emotional intelligence alone won’t–and can’t–tell you what you ought to do. That’s because emotional intelligence is a psychological mattter, but the question “What’s the right thing to do?” is an ethical one.

Weinstein’s five principles of ethical intelligence are:

  • Do No Harm
  • Make Things Better
  • Respect Others
  • Be Fair
  • Be Loving

And this new book will show you how to identify and improve your Ethical Intelligence and “imbue your life with meaning and enrich all of your relationships” by doing the right thing.

Intuitive Compass: Why the Best Decisions Balance Reason and Instinct by Francis Cholle, an international business consultant with a hefty and diverse vitae, including study in theater and clinical psychology.

In The Intuitive Compass, Cholle introduces us to Intuitive Intelligence, and defends our use of it vigorously. “Intuitive Intelligence is a set of skills I designed that uses intuition to get to the instinctual and nonconscious parts of our minds. It can be learned and developed, but because instinct does not operate in the same way as reason, Intuitive Intelligence requires unusual forms of learning and thinking.” The benefit of understanding instinct is then that we are able to alter our decision-making process to find balance and reason.

Cholle begins his book with an Intuitive Compass to help you determine how you make decisions, and then, surprisingly, he leads us into the field of play. There is a lot of good material that extends past play in this book, including how intuition allows agility and creativity, how intuition enables innovation, how you can use your intuitive intelligence; but one of my favorite lines is: “Play open us up to the possibility that we don’t need more of anything–time, money, knowledge, and so on–in order to produce more. It is a radical idea, especially in business, where we often hear the argument that budgets are limited and therefore the ability to innovate is limited.”

In the case of both books, as well as Gardner’s work, the compelling aspect is that the more information we learn about the way we think, the better we get at doing the right thing.

*Perhaps Gardner’s top business book is Five Minds for the Future. And for information about his GoodWork Project, visit www.goodworkproject.org.

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October 4, 2011

The Coming Jobs War

Filed under: Big Ideas,Blog,Book Reviews,Current Events — Jon @ 8:00 am
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Right now, some of us are sitting in positions we’ve held for years, and looking forward to staying that way. Others are scrambling to prove their worth in a highly competitive market. Yet others still may have given up, after years of trying to find work, with no hope in site.

The new Gallup book The Coming Jobs War, by Jim Clifton, says the situation is going to get more intense for each of those groups. And while an entrepreneurial spirit is certainly important for individuals during this time, the book’s aim focuses on cities’ business leaders and philanthropists as the solution to the crisis.

In this case, Clifton argues, a war, as severe as it sounds, is warranted. “He states, “I don’t use the term ‘war’ lightly. This really has to be a war on job loss, on low workplace energy, on healthcare costs, on low graduation rates, on brain drain, and on community disengagement. Those things destroy cities, destroy job growth, and destroy city GDP. Every city requires its own master plan that is as serious as planning for war.”

While his research seems dire, his urgency and passion are an inspiring look at what America can and should do to turn around the marketplace, the economy, and our own personal survival. A compelling and important read.

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September 29, 2011

Uncertainty

Filed under: Big Ideas,Blog,New Releases — Jon @ 2:24 pm
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I remember taking swimming lessons when I was a kid. I hated them. They were early in the morning so the water was a bit colder than usual, and besides, it was swimming – something I couldn’t really do, and worst case scenario, if I really screwed up, could drown from it. Not a fun way to start your day, in my book.

The worst was the day most people in the class feared: The High Dive. For some, it was a great opportunity to finally get to try it. But for the rest of us, it was the ultimate dread, the chance that something could really go wrong. I remember as I was waiting in line I could barely stand thinking about what would happen when I jumped off – that leap seemed contradictory to nearly everything I had learned up to that point, yet now I was expected to climb to a high platform and jump off into water I had barely learned to swim in. The risk seemed outrageous.

Jonathan Fields’ new book, Uncertainty: Turning Fear and Doubt Into Fuel for Brilliance, came out today, and it takes my high dive scenario and translates it to the adult world. What scares us? And how we react to that fear can determine what opportunities and successes we experience, and don’t. For Jonathan, his high dive was much higher than mine. He quit a well-paid job as a NY attorney to open a Yoga studio. That’s already a leap, but consider these other factors: he wasn’t trained to be a yoga instructor, and the day after he signed the lease for the building he’d use as the studio was a profoundly bad day: September 11, 2001.

Check out the story in his own words:

For him, the risk was high, but the circumstances surrounding that risk brought an even greater focus on his passion and doing what really mattered for him and his interest in helping others. This book is his story, but not just that, it greatly encourages those who read it to not be so afraid of the unknown, and to take a chance on things that truly are important to you. Fear and uncertainty can be what holds you back, or what inspires you to think creatively. How we deal with it is our choice.

As for my choice? I climbed the high dive, stood on the edge, and looked down. I could faintly hear my instructor yell, “Don’t look down. Look at the clock over on the wall, and then just take one step forward!” I was terrified. Time stood still.

I stared at the clock, and…

We all share these kinds of experiences, and without getting too hung up on what I did, ask yourself what fear and doubt you can confront. Uncertainty is a great guide if you need one.

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September 28, 2011

Is Your Idea Crazy Enough? An Excerpt from Creative Thinkering

Filed under: Big Ideas,Excerpts and Essays,Innovation,Uncategorized — Sally @ 12:42 pm
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IS YOUR IDEA CRAZY ENOUGH?
An Excerpt from Creative Thinkering: Putting Your Imagination to Work
by Michael Michalko

The playful openness of creative geniuses is what allows them to explore unthinkable ideas. Once Wolfgang Pauli, the discoverer of electron spin, was presenting a new theory of elementary particles before a professional audience. An extended discussion followed. Niels Bohr summarized it for Pauli’s benefit by saying that everyone had agreed his theory was crazy. The question that divided them, he claimed, was whether it was crazy enough to have a chance of being correct. Bohr said his own feeling was that it wasn’t crazy enough.

Logic hides in Bohr’s illogic. In genius, there is a tolerance for unpredictable avenues of thought. The result of unpredictable thinking may be just what is needed to shift the context and lead to a new perspective.

Here is what one marketing agency did. As reported on PSFK.com, it persuaded the “Unilever corporation to place GPS devices in selected boxes of its Omo brand detergent in Brazil. This enabled the agency to track the purchasers right to their doorsteps and surprise them with gifts. As soon as any one of the fifty Omo boxes bearing GPS devices was removed from the store shelf, one of its teams swooped into action and reached the shopper’s home within hours.”

The playful freedom that accompanies a “bizarre” idea permitted the agency to juxtapose possibilities that would not otherwise have been available, and to construct a sequence of events that would otherwise not have been constructed.

In another example, Spencer Silver, a 3M chemist who liked to play around with chemicals, tried mixing together different ones just to see what would happen. One of the things that happened was his invention of the special adhesive that made Post-it notes possible, a product that had accounted for over $300 million in business by 2002.

Spencer Silver is quoted as saying, “If I had thought about it, I wouldn’t have done the experiment. The literature was full of examples that said you can’t do this.” If he had studied the literature, he would have stopped his work. The key was not knowing what the experts believed, and experimenting to see what he could do. Silver, in a “Eureka” moment, realized he had developed an adhesive that created an impermanent bond.

But the problem was how to use his discovery. The company climate permitted Silver to continue with his efforts, but no one could develop it into a useful product. Silver had found a solution, but he hadn’t found a problem to solve it with. The breakthrough came when another 3M employee, Arthur Fry, got his inspiration. Art was a member of a church choir and used paper slips as bookmarks in the songbooks to identify the songs to be sung. Sometimes the paper would fly off and create problems. The idea of using Silver’s adhesive to make a better bookmark came to him while singing in the choir.

The bookmark inspired him to think of other paper-to-paper applications in which only one of the sheets of paper was coated with the glue. The problem was that 3M did not have the equipment to do this, so management was not enthusiastic about Fry’s application. Consequently Fry designed and built his own machine in his basement to manufacture the forerunner of the Post-it note. The machine was too large to get through his basement door, so he blasted a hole in the wall to get the machine to 3M. He then demonstrated the machine to management, engineers, salespeople, and production managers. His demonstration generated the enthusiasm to get management behind the project.

THINKING OUTSIDE YOUR CONE OF EXPECTATIONS

Thought is a process of fitting new situations into existing slots and pigeonholes in the mind. Just as you cannot put a physical thing into more than one physical pigeonhole at once, the processes of thought prevent you from putting a mental construct into more than one mental category at once. This is because the mind has a basic intolerance for ambiguity, and its first function is to reduce the complexity of its experiences.

When you come up with crazy or fantastical ideas, you step outside your cone of expectations and intentions — which is what happened to a manufacturer of dinner plates who had a problem with packaging. The plates were wrapped in old newspapers and packed in boxes. Every packer would eventually slow down to read the papers and look at the pictures. Most employees would drop to about 30 percent efficiency after a few weeks on the job.

The manufacturer tried using other material for packing, but that proved too expensive; the newspapers had been free. They tried using newspapers in different languages, but these were hard to obtain. They even offered incentives to workers to increase the number of plates wrapped, but without great success. Finally, one day in a meeting an exasperated supervisor said they should tape the workers’ eyes shut so they couldn’t read. This absurd comment created a lot of laughter as the others joked about his comment. But the supervisor had an “Aha!” moment: he got the idea to hire blind people to do the packing. The company not only greatly increased its packing efficiency but also received tax benefits for hiring the disabled.

MICHAEL MICHALKO is the author of Creative Thinkering, Thinkertoys, Cracking Creativity, and ThinkPak. While an army officer, he organized a team of NATO intelligence specialists and international academics to find the best inventive thinking method. He has expanded and taught these techniques to numerous Fortune 500 companies and organizations. He lives in Rochester, New York. Visit him online at http://www.CreativeThinking.net.

Excerpted from the book Creative Thinkering: Putting Your Imagination to Work ©2011 by Michael Michalko. Printed with permission of New World Library, Novato, CA. www.newworldlibrary.com

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September 26, 2011

The Flaw and the Preface to Lost Decades

Filed under: Big Ideas,Current Events,Excerpts and Essays — dylan @ 12:36 pm
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This will be the second year that 800-CEO-READ sponsors a film at the Milwaukee Film Festival.
Last year it was the David Hillman Curtis directed concert film of David Byrnes’s 2008/2009 tour, Ride, Rise, Roar. As a company full of musicians and music lovers, sponsoring the film seemed to fit our personality and culture. But this year we’re sponsoring a film whose issues relate more strongly to what we actually talk about and review here at 800-CEO-READ. The film we’re sponsoring (and seeing as a group tonight) is The Flaw, whose title comes from Alan Greenspan’s testimony before a congressional committee investigating the financial crisis in 2008:

I have found a flaw in the model that defines how the world works. I was shocked.

Directed by David Sington, The Flaw attempts to expose and explain the underlying causes of the financial crisis, interviewing victims of the crash, people who witnessed it from the ground, and some of the world’s brightest economists. One such economist is Joseph Stiglitz, who explains:

When you have growing inequality, typically your level of consumption goes down. In the United States we said to those whose income was not going anywhere, don’t worry, continue to spend as if your income was going up. But the only way you do that is through debt and that particular model has been broken.

Released last week, Lost Decades: The Making of America’s Debt Crisis and the Long Recovery also attempts to explain the underlying causes of the crisis, and it also comes to the issue of debt. In fact, the book’s authors, Menzie D. Chinn and Jeffry A. Frieden, define the financial crisis at its very core as a debt crisis. The debt is an issue that is in the news every day, and has Capitol Hill at loggerheads on seemingly every issue. From afar, it looks and sounds like a debate that is leaving the realms of reason. Hopefully the context, history, analysis and expertise that Lost Decades provides can help make sense of it all—if not in Washington, then at least in our own minds.

To help spread the word, I asked the good folks of W.W. Norton & Company for an excerpt I could share with you here on the blog, and they were kind enough to oblige.

Preface to Lost Decades BY MENZIE D. CHINN & JEFFRY A. FRIEDEN

The midterm elections were over, and the Republicans had made stunning advances. The GOP had picked up over seventy seats in the House of Representatives and seven seats in the Senate. Perhaps just as important, the Republicans had taken a number of crucial governorships from the Democrats, including the pivotal states of Michigan, Ohio, and Pennsylvania. The election was a dramatic reversal of the Democrats’ landslide victory two years earlier, and was a particular blow to the president, who had swept into office in the midst of a devastating economic crisis.

Certainly the Democrats could be satisfied with some major legislative accomplishments, passed with their previous majorities. But now, a disappointing economy and stubbornly high unemployment rate had brought back to life a Republican Party that had appeared moribund two years earlier. For the foreseeable future, the Republicans, together with allies among conservative Democrats, would be able to block or force changes in just about any initiative the president had in mind.

The year was 1938, and the economic recovery from the Great Depression was in deep trouble. Back in 1933, when Franklin D. Roosevelt became president, the country was in the fourth year of the deepest depression in its history. The Roosevelt administration had moved quickly and aggressively to try to bring the country’s economy back to life. Roosevelt and his fellow Democrats in Congress purged the nation’s banking system and imposed stringent new regulations. They created an ambitious array of federal programs to put the millions of unemployed to work. And they initiated the first serious federal social program in American history, Social Security.

By 1936 the economy was recovering. The unemployment rate had fallen to 14 percent, still high but down from where it was, 25 percent, when Roosevelt took office. Both national income and the stock market were rising rapidly. In light of the upturn, the Roosevelt administration resolved to tackle the federal government’s budget deficit, which in 1936 had reached nearly 5 percent of gross domestic product (GDP), a level unprecedented in peacetime. Delivering on promises to trim the deficit, the administration cut spending by 20 percent and raised taxes by even more; within a year the budget was practically back to balance. Meanwhile, the Federal Reserve tightened monetary policy, apparently to avoid a resurgence of inflation.

In the aftermath of the fiscal and monetary retrenchment, in the summer of 1937 the American economy collapsed into a steep recession. Industrial production dropped by one-third, the stock market plummeted more than 40 percent, and the unemployment rate shot back up to 19 percent. As the American economy slumped, the administration’s popularity faded rapidly. And the result of the 1938 midterm election reflected this loss of confidence in the federal government’s ability to bring the nation out of the Depression.

Today the United States and the world are slowly recovering from the most serious international economic crisis since the Great Depression of the 1930s. As was the case in the late 1930s, the causes and consequences of the crisis are hotly debated. And just as then, a great deal rides on an appropriate understanding of why and how the United States got to where it is today. How could the world’s richest economy go broke? How did the world’s most powerful banks collapse? Why would the most conservative government in modern American history nationalize enormous portions of the U.S. economy? Why did millions of American families lose their homes, and millions more their jobs? Whose fault is it all?

We have a unique perspective on these debates. We have spent, between the two of us, more than fifty years working on debt crises. We have lived through and studied financial and currency disasters in Europe, Latin America, Asia, and Russia. We have witnessed firsthand, and analyzed in detail, the human, social, and political wreckage of irresponsible borrowing. We have watched country after country lose decades of economic progress to the austere aftermath of financial crises. But we never feared that we would see a classic debt crisis in our own homeland. And we never imagined that our country could face the prospect of almost two decades lost to misguided policies, an unnecessary crisis, and a daunting task of economic reconstruction. Nonetheless, there is value in our ability to compare the current crisis to those we have known and investigated. As we examine the events of the past decade, and look toward the decade to come, we can draw on a wealth of comparative and historical experiences to guide our analysis.

The United States is in the midst of the greatest failure of economic policy, and of financial markets, of recent times. This is the story of how and why it got there, and of what the nation must do to repair a wounded economy.

The crisis

The most serious economic crisis of the past seventy-five years began as the summer of 2008 ended. In August and September, credit markets everywhere entered a downward spiral that spun faster and faster until, in the first two weeks of October, it seemed that the world economy might be coming to an immediate end. During those dark weeks and months, an international economic order that had inspired faith bordering on rapture around the world appeared to have turned on its creators and strongest supporters. The United States, the very center of economic globalization, was gripped in a panic that threatened to destroy the world economy. The collapse seemed to surge out of nothing and nowhere. One week there was mild concern about a sluggish housing market in the American Sunbelt, the next week the whole world was staring over a precipice into the end of global capitalism. The world’s strongest economy turned into the sick man of international capitalism. The American paragon of capitalist virtue, protector of the free-market faith, took over huge swaths of the private sector. What happened? How could this come to pass?

The United States borrowed and spent itself into a foreign debt crisis. Between 2001 and 2007, Americans borrowed trillions of dollars from abroad. The federal government borrowed to finance its budget deficit; households borrowed to allow them to consume beyond their means. As money flooded in from abroad, Americans spent some of it on hard goods, especially on cheap imports. They spent most of the rest on local goods and services, especially financial services and real estate. The result was a broad-based economic expansion. This expansion—especially in housing—eventually became a boom, then a bubble. The bubble burst, with disastrous effect, and the country was left to pick up the pieces.

The American economic disaster is simply the most recent example of a “capital flow cycle,” in which capital floods into a country, stimulates an economic boom, encourages high-flying financial and other activities, and eventually culminates in a crash. In broad outlines, the cycle describes the developing-country debt crisis of the early 1980s, the Mexican crisis of 1994, the East Asian crisis of 1997–1998, the Russian and Brazilian and Turkish and Argentine crises of the late 1990s and into 2000–2001—and, in fact, the German crisis of the early 1930s and the American crisis of the early 1890s. We can best, and most fully, understand the current debt crisis by understanding the dozens of debt crises that have come before it. What causes such crises? What can we learn from the paths to them, through them, and out of them?

To be sure, the most recent American version of a debt crisis was replete with its own particularities: an alphabet soup of bewildering new financial instruments, a myriad of regulatory complications, an unprecedented speed of contagion. Yet for all the unique features of contemporary events, in its essence this was a debt crisis. Its origins and course are of a piece with hundreds of episodes in the modern international economy.

For a century American policymakers and their allies in the commanding heights of the international financial system warned governments of the risks of excessive borrowing, unproductive spending, foolish tax policies, and unwarranted speculation. Then, in less than a decade, the United States proceeded to demonstrate precisely why such warnings were valid, pursuing virtually every dangerous policy it had advised others against.

Most analysts of the crisis miss this central point. Each of the many accounts published since 2008 has focused on one or another limited aspect of the crisis. Some follow the financial meltdown and response blow by blow, yielding vivid insights into the personalities and institutions involved. Other accounts emphasize the role of financial regulators in the collapse, documenting the influence of Wall Street over the deliberations in the halls of Washington, D.C. Yet others explain how the financial crisis caused so deep a global recession. Our analysis starts with the macroeconomic drivers of the experience, includes the political pressures, incorporates the regulatory enablers, and puts the crisis into a comparative and historical context, drawing parallels and lessons from the dozens of similar episodes from the past.

The American crisis immediately spread to the rest of the international economy. The world learned a valuable lesson about global markets: they transmit bad news as quickly as good news. The American borrowing binge had pulled much of the world along with it—drawing some countries (Great Britain, Ireland, Iceland, Spain, Greece) into a similar debt-financed boom, and tapping other countries (China, Japan, Saudi Arabia, Germany) for the money to make it possible. The collapse dragged financial markets everywhere over a cliff in a matter of weeks, with broad economic activity following within months.

Impact and implications

The global crisis raises the specter of global conflict. As governments scramble to protect their citizens, their actions can be costly to their neighbors: a bailout favors national over foreign firms, devaluation puts competitive pressures on trading partners, big deficits suck in capital from the rest of the world. The 1929 recession became a depression largely because of the collapse of international cooperation; the current crisis may head in that direction if international collaboration similarly fails.

With or without broader international complications, the United States faces hard times. The country lost the first decade of the twenty-first century to an ill-conceived boom and a subsequent bust. It is in danger of losing another decade to an incomplete recovery and economic stagnation.

In order to not lose the decade to come, the United States will have to bring order to financial disarray, gain control of a burgeoning burden of debt, and re-create the conditions for sound economic growth and social progress. None of this will be easy. The tasks are made more difficult by the fact, which we have learned to our alarm, that all too many policymakers and observers cling to the failed notions that got the country into such trouble in the first place. If Americans do not learn from this painful episode, and from others like it, they will condemn the nation to another lost decade.

Excerpted from Lost Decades: The Making of America’s Debt Crisis and the Long Recovery
Copyright © 2011 by Menzie D. Chinn and Jeffrey A. Friedan
All rights reserved
Reprinted with permission of the publisher, W. W. Norton & Company, Inc.

ABOUT THE AUTHORS
Menzie D. Chinn teaches at the University of Wisconsin, Madison, and coauthors the influential blog Econbrowser.

Jeffry A. Frieden teaches at Harvard University. He is the author of Global Capitalism: Its Fall and Rise in the Twentieth Century.

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September 14, 2011

A Giving Business is a Good Business

Filed under: Big Ideas,Book Reviews — Sally @ 4:25 pm
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Teachers in the Milwaukee Public School system were surprised on their first day back in the classroom this fall with a gift from a local company, Penzey’s Spices. The gift included a jar of their newest salt-free seasoning, Forward! (which not-incidentally is Wisconsin’s state motto), and a jar of their all-purpose cinnamon. And, since my husband is a teacher, we were he was lucky enough to be a recipient. The gift box was created and given, as owner Bill Penzey explains in a note in their fall catalog, to send support to teachers who do a valuable if sometimes under-appreciated job.

If you are a subscriber of Penzey’s monthly magazine or even get their seasonal spice catalog, you’ll know that Penzey’s has a very specific point of view. Owner Bill Penzey explains the teacher gift box in a catalog letter, saying:

Penzey’s Forward! is dedicated to those in our past whose effort and kindness opened for us a world of opportunity. Forward! suggests we repay this debt to our past by honestly supporting those whose efforts keep the door to the world of opportunity open for those who come after us. In this way we move Forward. This is what teaching is all about, and it is also what cooking is all about.

Nothing provocative in that, but then he adds,

To add to their load the blame for our post-credit-swap economy when their work does more to build our economy than anyone else’s is no recipe for a productive school year.

You only have to do a quick Google search to know that not everyone wants their spices to come with a dash of political and/or cultural opinion. But that same Google search will show ample support of Penzey’s action and certainly strengthens the affiliation many of us already feel for the brand. It is refreshing to find a company like Penzey’s that does not prevaricate. They aim to be exactly who they are—who their founder was—and they don’t hesitate to advocate that position, yet still produce a product that is highly regarded and has found success nationally.

Seth Godin addresses this quality on his blog today in a post explicating Merging/Emerging.

Emerging is when you use a platform to come into your own. Merging is when you sacrifice who you are to become part of something else.

Merging is what the system wants from you. To give up your dreams and your identity to further the goals of the system. Managers push for employees to merge into the organization.

Emerging is what a platform and support and leadership allow you to do. Emerging is what we need from you.

Penzey’s has not sacrificed who they are to become part of something else (to paraphrase Seth) and continues to emerge as a good and giving business.

***

Blake Mycoskie started TOMS Shoes pretty much out of the blue while on vacation in Argentina in 2006. He was already a busy businessman, an entrepreneur with seriously diverse interests. But on vacation, a product and a problem presented itself, and he couldn’t ignore serendipity. Mycoskie recognized that relying on donors to fund the shoe drives he was witnessing in Argentina was plumbing a well that would at some point dry up. But, if he could create a product (simple, comfy shoes also inspired by the locals of that country) that people would love, and a story that people could fall in love with, the funds needed to help children who need help the most just might keep rolling in and more and more children could get assistance. So he decided that for each pair of TOMS shoes he sold, TOMS would send a pair of shoes to a child who has none, and by 2010 he and his team had put a million pairs of shoes on the feet of kids who most needed them. When TOMS started selling sunglasses, TOMS tied it to a program that provides children in need of eye care and eye wear.

So what did you think would happen when Blake Mycoskie released his first book? That’s right, if you buy a copy of Mycoskie’s new book, Start Something That Matters, Random House will give a book to a child through FirstBook.org.

Mycoskie’s tale shares yet another example of a company created to produce an excellent product that also stays true to its founder’s beliefs, and encourages others to not only consume, but to provide. In Start Something That Matters, Mycoskie’s story will bring tears to your eyes as he relays his emotions upon bringing the first pairs of shoes to children. But he will also show you that his personal values match the basic tenets of his company, such as his instruction to “Keep It Simple” in regards to both your business model and your personal life, where he advocates cleaning out your closets four times a year (though I think he’d probably hope you keep those TOMS Shoes in there). Mycoskie also introduces us to other giving companies such as method and donorschoose.org that make giving and social profit an imperative.

Of course, what stories like Penzey’s Spices and TOMS Shoes make clear is that businesses do not have to sacrifice their social values for success, and that we don’t have to either.

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August 31, 2011

To Be or Not to Be…Creative

Filed under: 100 Best,Big Ideas,Innovation — Sally @ 10:31 am
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A friend posted on Facebook a link to this article, with the somewhat obvious title, “People are biased against creative ideas, studies find,” and it’s contents have stuck with me all week. It comes from a website called PhysOrg which I’ve never heard of despite having a science geek for a husband. PhysOrg’s mission as described on it’s website is “to provide the most complete and comprehensive daily coverage of the full sweep of science, technology, and medicine news.” And with a goal of 100 new articles posted a day on “physics, earth science, medicine, nanotechnology, electronics, space, biology, chemistry, computer sciences, engineering, mathematics and other sciences and technologies,” and a membership of 1.75 million scientists, researchers and engineers, PhysOrg is an impressive sight site.

While I joked that the title of the article is somewhat obvious–we certainly know that there is a percentage of the population who disdain creative ideas, or defensively discredit them, and sometimes we excuse them as being left-brained–but the article (and the study it is based on) itself is making an additional more provocative point. In addition to bias against creative ideas, the research (from a forthcoming article in Psychological Science) shows that some people don’t know a creative idea from a hole in the ground, that some people can’t actually see a creative idea.

In addition to a sort of creativity blindness, another point that the research highlights is: “Objective evidence shoring up the validity of a creative proposal does not motivate people to accept it.” Considering the number of PowerPoint presentations that are often crafted to defuse any skepticism of the overall “big idea,” this is perspective-changing stuff. In fact, the authors of the study suggest that the only way to rid organizations, even those whose intentions are deeply rooted in innovation and creativity, of this bias or blindness could even be this drastic: “The field of creativity may need to shift its current focus from identifying how to generate more creative ideas to identify how to help innovative institutions recognize and accept creativity.”

That’s a pretty big task, and how exactly can it happen? Perhaps we can look to Micheal Michalko for help. Michalko is the author of Thinkertoys, one of our The 100 Best Business Books of All Time.

While readying The 100 Best for it’s updated paperback release this fall, we spent some extra time with the books we featured briefly in our Takeaway chapter of the book, expanding the reviews to include more detail. It was especially fun for us to revisit Thinkertoys not only because some of the content is reminiscent of those variety puzzle magazines found in drugstores that we all secretly and not-so-secretly love, but because of it’s applicability. Just as the subtitle–A Handbook of Creative-Thinking Techniques–says, Thinkertoys can help those aforementioned folks who aren’t the creative type learn how to be creative. That’s the important word here: learn. No, not everyone is creative. But creativity, according to Michalko, can be self-taught, cultivated, discovered. You can choose to BE creative.

And Michalko knows a thing or two about getting creativity-resistant organizations to change. His website bio explains:

As an officer in the United States Army, Michael organized a team of NATO intelligence specialists and international academics in Frankfurt, Germany, to research, collect, and categorize all known inventive-thinking methods. His international team applied those methods to various NATO military, political, and social problems and in doing so it produced a variety of breakthrough ideas and creative solutions to new and old problems. After leaving the military, Michael facilitated CIA think tanks using his creative thinking techniques.

Just a visit to his website, not unlike PhysOrg in its wealth of references, which yields an absolutely stunning assortment of articles, interviews, resources: a veritable practicum. You can also follow Michalko via his blog on Psychology Today. But perhaps his work is best appreciated in book form, where you can scribble in the margins, and bend the pages, and carry it over to your coworker’s cubicle to test them on one of his thought experiments. Yes, make sure you have a pen when you are opening up one of Michalko’s books, and we are all very lucky that he has a new one available for us to learn from, titled Creative Thinkering.

In Creative Thinkering, Michalko challenges us to put our imaginations to work and believes with a great passion that everyone is creative. Or should be. Or can be. It is as though we’ve unlearned creativity. “We’ve been educated to process information based on what has happened in the past, what past thinkers thought, what exists now. Once we think we know how to get the answer, based on what we have been taught, we stop thinking,” he explains in the Introduction, and then immediately proceeds to challenge the way you think with some mind-bending games.

In this new book, Michalko wants to teach us conceptual blending, “which is the act of combining, or relating, unrelated items in order to solve problems, create new ideas, and even rework old ideas….It is no coincidence that the most creative and innovative people throughout history have been experts at forcing new mental connections via the conceptual blending of unrelated objects.” And once again, the material he presents throughout the book is entertaining but also so very do-able. Through the exercises and insights in his books, Michalko provides the material to train even the most creatively-blind how to open his or her eyes to their own and others’ creative ideas.

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August 29, 2011

Culture and The Innovator’s Cookbook

Filed under: Big Ideas,Book Reviews — dylan @ 4:30 pm
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When you booted up Windows 95, a man named Brian Peter George St. John le Baptiste de la Salle Eno made that experience more remarkable and memorable. He made the little league game at the end of the movie Traffic seem profound and timeless—a gentle, reassuring reminder that the universe is stitched together of individual, seemingly mundane moments. His music makes one think and write things like that, takes you to different dimensions and other worlds. Just writing this post caused me to stumble across a YouTube video that is nothing but the Windows 95 Startup Sound for 10 Minutes, and not only did I listen to it, but I took the brilliant advice of the only intelligent comment I’ve ever come across on YouTube and played it in multiple tabs at once. The result was 10 minutes of bliss. Window 95 slowed down 23 times is also lovely (and if you happen you watch the equally slowed down Microsoft commercial that accompanies it, pause it at minute 2:12).

I write of Brian Eno today because he has showed up in two books that have floated across my desk recently. Both books—Culture, edited by John Brockman, and The Innovator’s Cookbook edited by Steven Johnson—are compilations of material that include interviews with Eno. You may know the editors… Steven Johnson from his wonderful 2010 book, Where Good Ideas Come From, and John Brockman from his many compilations, including This Will Change Everything: Ideas That Will Shape the Future, My Einstein and The Mind—the last of which was released alongside Culture earlier this month. Brockman is also the author of The Third Culture: Beyond the Scientific Revolution.

In Culture, Eno observes that art “seems to to be something we are biologically inclined to do,” that “all human groups engage in something that we call artistic behavior” and talks about the need to develop a language for having a conversation about the arts. He compares the transition he’s looking for to the way Darwin changed the field of natural history forever by giving it a common language—taking it from a science that simply collected material to one that could develop theories about the material collected. He goes on to discuss his own theory that we codify most of our knowledge in metaphors, and that “Science … enables us to come up with a structure upon which we can build useful metaphors.: He continues: “This is why artists are interested in science … because science keeps coming up with big ideas, like chaos, like complexity, that we then think, ah , yes, perhaps that’s how a lot of things work. Then we have a new metaphor.” Speaking of the spectrum, or continuum, our minds move along, he says:

If I drew [a] spectrum of the highly rational to the highly intuitive, what I would have to say is that we don’t spend much of our time at either of those extremes. We spend most of our time somewhere along the middle.

You have art writers who constantly celebrate the “intuition” extreme and think that this is the sort of apex of human existence, and you have scientists who by default, almost, dignify the other one. That’s where they live, or that’s where they’d like to live. They want to be able to make the kind of statements that push that boundary. What I would like to see is a conversation that admits that we spend most of our time somewhere in the middle, and we ought to find a way of thinking about it.

I suppose at the root of all this is the feeling that possibly the only way that humans can remain cooperative is by those of us who are artists or who are interested in the arts realizing that we have some kind of a job to do. It’s no good anymore, as far as I’m concerned, for artists to just take the bohemian attitude of, oh, it just comes out of me, and I don’t know what I’m doing, etc. I just can’t stand that; I don’t want this romantic attitude that says artists shouldn’t be a part of this planet. This is a real job, and it has to do something.

In Steven Johnson’s The Innovator’s Cookbook, coming out in October from Riverhead Books, he discusses how technologies spark innovation, not the other way around:

I think one thing that is interesting that I don’t think people acknowledge is that normally we think that technologies arise out of good ideas. So somebody has a brilliant scientific notion or artistic notion and then they create the technology to realize it. But actually I more and more think that it’s the technology that precedes the understanding of the principles. This is what happens in science a lot: a tool is invented, and the tool then leads to some new realization, something that you could now do or see or understand that you could never have understood before. I think that often happens in the arts. Think for instance of my favorite example—because it’s the one I’ve spent my life working in—the recording studio. The multitrack studio was invented for completely mundane reasons so that engineers could could more easily balance the voice against the rest of the performers. They didn’t have to make all those decisions before the recording; they could do it afterward. But of course, that humble invention gave rise to a whole different way of making music, really a different understanding of music completely.

Beyond Eno, Brockman’s book contains Clay Shirky (author of Here Comes Everybody and Cognitive Surplus), Jaron Lanier (You Are Not a Gadget) and Douglass Rushkoff (author of Get Back in the Box: How Being Great at What You Do Is Great for Business, Life, Inc. and Program and Be Programmed) among many others. Johnson pulls from the minds of Clayton Christensen (The Innovator’s Dilemma), Richard Florida (The Rise of the Creative Class), Tom Kelley (The Art of Innovation) and more. The two books also share Stewart Brand (author of Whole Earth Discipline among other books) as a contributor. Taken together, they make for a really interesting read about culture, innovation, the culture of innovation, and the innovation of culture. I highly recommend both books—and Brian Eno.

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