Tag: Out of Print

A Simple Way to Improve the Pro-Con List to Make Better Decisions

Seymour Schulich

The first chapter in Seymour Schulich‘s book, Get Smarter: Life and Business Lessons, offers a decision tool that adds to the simple pro-and-con list that many of us have used to make decisions. Schulich, a self-made billionaire, is one of Canada's richest and best-known businessmen.

I learned this tool in a practical mathematics course more than fifty years ago and have used it for virtually every major decision of my adult life. It has never let me down and it will serve you well, too.

You all know the simple pro-and-con list? The one where you divide the page in two and simply list out all the pros and cons. Well, the Decision-Maker adds a twist to that. Here's how it works.

On one sheet of paper, list all the positive things you can about the issue in question, then give each one a score from zero to ten—the higher the score, the more important it is to you.

On another sheet, list the negative points, and score them from zero to ten—only this time, ten means it's a major drawback. Suppose you are thinking of buying a house, and you tour one that's in your price range, except the owners have painted every room to look like a giant banana. If you really hate yellow and can't stand the thought of lifting a paint brush, you might give “ugly yellow house” a ten, and if it's not that big a deal, maybe a two or a three.

Now add up the scores. But here's the rule.

If the positive score is at least double the negative score, you should do it—whatever “it” is. But if the positives don't outweigh the negatives by that two-to-one ratio, don't do it, or at least think twice about it.

Yes that sounds simple. I agree. But I also don't think that things need to be complicated in order to be effective.

The Decision-Maker is designed not to allow one or two factors to sway a major life decision in a disproportionate way. It forces you to strip away the emotion and really examine the relative importance of each point—which, of course, is why it works so well.

This tool works for groups too.

When we were considering whether to sell our royalty company, Franco-Nevada, to Newmont Mining, Franco's executive team produced a collective Decision-Maker. We listed all the pros and cons, then the top four executives assigned their own point scores to each. We averaged them, the positives far outweighed the negatives, and we sold the company.

The Etiquette of Courtship

Perfect Behavior 1
“It’s as if in your soul there is a preprepared spot for every one of my thoughts,” Vladimir Nabokov wrote during his courtship of Véra Slonim. She eventually became Mrs. Nabokov.

In 1922 Donald Stewart wrote Perfect Behavior: A Guide for Ladies and Gentlemen in all Social Crises (Gutenberg). This book will leave you howling with laughter.

In Chapter One, Stewart writes on courtship:

Courtship is one of the oldest of social customs, even antedating in some countries such long-established usages as marriage, or the wearing of white neckties with full evening dress. The beginnings of the etiquette of courtship were apparently connected in some way with the custom of “love” between the sexes, and many of the old amatory forms still survive in the modern courtship. It is generally agreed among students of the history of etiquette that when “love” first began to become popular among the better class of younger people they took to it with such avidity that it was necessary to devise some sort of rules for the conduct of formal or informal love-making. These rules, together with various amendments, now constitute the etiquette of courtship.

How to Make Correct Introductions

Your first step should be, of course, the securing of an introduction. Introductions still play an important part in social intercourse, and many errors are often perpetrated by those ignorant of savoir faire (correct form). When introducing a young lady to a stranger for example, it is not au fait (correct form) to simply say, “Mr. Roe, I want you to shake hands with my friend Dorothy.” Under the rules of the beau monde (correct form) this would probably be done as follows: “Dorothy (or Miss Doe), shake hands with Mr. Roe.” Always give the name of the lady first, unless you are introducing some one to the President of the United States, the Archbishop of Canterbury, a member of the nobility above a baron, or a customer. The person who is being “introduced” then extends his (or her) right ungloved hand and says, “Shake.” You “shake,” saying at the same time, “It's warm (cool) for November (May),” to which the other replies, “I'll say it is.”

This brings up the interesting question of introducing two people to each other, neither of whose names you can remember. This is generally done by saying very quickly to one of the parties, “Of course you know Miss Unkunkunk.” Say the last “unk” very quickly, so that it sounds like any name from Ab to Zinc. You might even sneeze violently. Of course, in nine cases out of ten, one of the two people will at once say, “I didn't get the name,” at which you laugh, “Ha! Ha! Ha!” in a carefree manner several times, saying at the same time, “Well, well—so you didn't get the name—you didn't get the name—well, well.” If the man still persists in wishing to know who it is to whom he is being introduced, the best procedure consists in simply braining him on the spot with a club or convenient slab of paving stone.

The “introduction,” in cases where you have no mutual friend to do the introducing, is somewhat more difficult but can generally be arranged as follows:
Procure a few feet of stout manila rope or clothes-line, from any of the better-class hardware stores. Ascertain (from the Social Register, preferably) the location of the young lady's residence, and go there on some dark evening about nine o'clock. Fasten the rope across the sidewalk in front of the residence about six inches or a foot from the ground. Then, with the aid of a match and some kerosene, set fire to the young lady's house in several places and retire behind a convenient tree. After some time, if she is at home, she will probably be forced to run out of her house to avoid being burned to death. In her excitement she will fail to notice the rope which you have stretched across the sidewalk and will fall. This is your opportunity to obtain an introduction. Stepping up to her and touching your hat politely, you say, in a well modulated voice, “I beg your pardon, Miss Doe, but I cannot help noticing that you are lying prone on the sidewalk.” If she is well bred, she will not at first speak to you, as you are a perfect stranger. This silence, however, should be your cue to once more tip your hat and remark, “I realize, Miss Doe, that I have not had the honor of an introduction, but you will admit that you are lying prone on the sidewalk. Here is my card—and here is one for Mrs. Doe, your mother.” At that you should hand her two plain engraved calling cards, each containing your name and address. If there are any other ladies in her family—aunts, grandmothers, et cetera—it is correct to leave cards for them also. Be sure that the cards are clean, as the name on the calling card is generally sufficient for identification purposes without the addition of the thumbprint.

When she has accepted your cards, she will give you one of hers, after which it will be perfectly correct for you to assist her to rise from the sidewalk. Do not, however, press your attentions further upon her at this time, but after expressing the proper regret over her misfortune it would be well to bow and retire.

Perfect Behavior 2

Cards and Flowers

The next day, however, you should send flowers, enclosing another of your cards. It might be well to write some message on the card recalling the events of the preceding evening—nothing intimate, but simply a reminder of your first meeting and a suggestion that you might possibly desire to continue the acquaintanceship. Quotations from poetry of the better sort are always appropriate; thus, on this occasion, it might be nice to write on the card accompanying the flowers—”‘This is the forest primeval'—H. W. Longfellow,” or “‘Take, oh take, those lips away'—W. Shakespeare.” You will find there are hundreds of lines equally appropriate for this and other occasions, and in this connection it might be well to display a little originality at times by substituting pertinent verses of your own in place of the conventional quotations. For example—”This is the forest primeval, I regret your last evening's upheaval,” shows the young lady in question that not only are you well-read in classic poetry, but also you have no mean talent of your own. Too much originality, however, is dangerous, especially in polite social intercourse, and I need hardly remind you that the floors of the social ocean are watered with the tears of those who seek to walk on their own hook.

Within a week after you have sent the young lady the flowers, you should receive a polite note of thanks, somewhat as follows: “My dear Mr. Roe: Those lovely flowers came quite as a surprise. They are lovely, and I cannot thank you enough for your thoughtfulness. Their lovely fragrance fills my room as I write, and I wish to thank you again. It was lovely of you.”

Flowers and their Message in Courtship

It is now time to settle down to the more serious business of courtship. Her letter shows beyond the shadow of a figurative doubt that she is “interested,” and the next move is “up to you.” Probably she will soon come into the office to see her father, in which case you should have ready at hand some appropriate gift, such as, for example, a nice potted geranium. Great care should be taken, however, that it is a plant of the correct species, for in the etiquette of courtship all flowers have different meanings and many a promising affair has been ruined because a suitor sent his lady a buttercup, meaning “That's the last dance I'll ever take you to, you big cow,” instead of a plant with a more tender significance.

Some of the commoner flowers and their meaning in courtship are as follows:
Fringed Gentian—”I am going out to get a shave. Back at 3:30.”
Poppy—”I would be proud to be the father of your children.”
Golden-rod—”I hear that you have hay-fever.”
Tuberose—”Meet me Saturday at the Fourteenth Street subway station.”
Blood-root—”Aunt Kitty murdered Uncle Fred Thursday.”
Dutchman's Breeches—”That case of Holland gin and Old Tailor has arrived. Come on over.”
Iris—”Could you learn to love an optician?”
Aster—”Who was that stout Jewish-looking party I saw you with in the hotel lobby Friday?”
Deadly Nightshade—”Pull down those blinds, quick!”
Passion Flower—”Phone Main 1249—ask for Eddie.”
Raspberry—”I am announcing my engagement to Charlie O'Keefe Tuesday.”
Wild Thyme—”I have seats for the Hippodrome Saturday afternoon.”

The above flowers can also be combined to make different meanings, as, for example, a bouquet composed of three tuberoses and some Virginia creeper generally signifies the following, “The reason I didn't call for you yesterday was that I had three inner tube punctures, besides a lot of engine trouble in that old car I bought in Virginia last year. Gosh, I'm sorry!”

But to return to the etiquette of our present courtship. As Miss Doe leaves the office you follow her, holding the potted plant in your left hand. After she has gone a few paces you step up to her, remove your hat (or cap) with your right hand, and offer her the geranium, remarking, “I beg your pardon, miss, but didn't you drop this?” A great deal depends upon the manner in which you offer the plant and the way she receives it. If you hand it to her with the flower pointing upward it means, “Dare I hope?” Reversed, it signifies, “Your petticoat shows about an inch, or an inch and a half.” If she receives the plant in her right hand, it means, “I am”; left hand, “You are”; both hands—”He, she or it is.” If, however, she takes the pot firmly in both hands and breaks it with great force on your head, the meaning is usually negative and your only correct course of procedure is a hasty bow and a brief apology.

Receiving an Invitation to Call

Let us suppose, however, that she accepts the geranium in such a manner that you are encouraged to continue the acquaintance. Your next move should be a request for an invitation to call upon her at her home. This should, above all things, not be done crudely. It is better merely to suggest your wish by some indirect method such as, “Oh—so you live on William Street. Well, well! I often walk on William Street in the evening, but I have never called on any girl there—YET.” The “yet” may be accompanied by a slight raising of your eyebrows, a wink, or a friendly nudge with your elbow. Unless she is unusually “dense” she will probably “take the hint” and invite you to come and see her some evening. At once you should say, “WHAT evening? How about TO-NIGHT?” If she says that she is already engaged for that evening, take a calendar out of your pocket and remark, “Tomorrow? Wednesday? Thursday? Friday? I really have no engagements between now and October. Saturday? Sunday?” This will show her that you are really desirous of calling upon her and she will probably say, “Well, I think I am free Thursday night, but you had better telephone me first.”

Making the First Call

The custom of social “calls” between young men and young women is one of the prettiest of etiquette's older conventions, and one around which clusters a romantic group of delightful traditions. In this day and generation, what with horseless carriages, electric telephones and telegraphs, and dirigible gas bags, a great many of the older forms have been allowed to die out, greatly, I believe, to our discredit. “Speed, not manners,” seems to be the motto of this century. I hope that there still exist a few young men who care enough about “good form” to study carefully to perfect themselves in the art of “calling.” Come, Tom, Dick and Harry—drop your bicycles for an afternoon and fill your minds with something besides steam engines and pneumatic tires!

The first call at the home of any young lady of fashion is an extremely important social function, and too great care can not be taken that you prepare yourself thoroughly in advance. It would be well to leave your work an hour or two earlier in the afternoon, so that you can go home and practice such necessary things as entering or leaving a room correctly. Most young men are extremely careless in this particular, and unless you rehearse yourself thoroughly in the proper procedure you are apt to find later on to your dismay that you have made your exit through a window onto the fire-escape instead of through the proper door.

Conversation and some of its uses

Your conversation should also be planned more or less in advance. Select some topic in which you think your lady friend will be interested, such as, for example, the removal of tonsils and adenoids, and “read up” on the subject so that you can discuss it in an intelligent manner. Find out, for example, how many people had tonsils removed in February, March, April. Contrast this with the same figures for 1880, 1890, 1900. Learn two or three amusing anecdotes about adenoids. Consult Bartlett's “Familiar Quotations” for appropriate verses dealing with tonsils and throat troubles. Finally, and above all, take time to glance through four or five volumes of Dr. Eliot's Five Foot Shelf, for nothing so completely marks the cultivated man as the ability to refer familiarly to the various volumes of the Harvard classics.

A proper Call

Promptly at the time appointed you should arrive at the house where the young lady is staying. In answer to your ring a German police dog will begin to bark furiously inside the house, and a maid will finally come to the door. Removing your hat and one glove, you say, “Is Miss Doe home?” The maid replies, “Yass, ay tank so.” You give her your card and the dog rushes out and bites you on either the right or left leg. You are then ushered into a room in which is seated an old man with a long white beard. He is fast asleep. “Dot's grampaw,” says the maid, to which you reply, “Oh.” She retires, leaving you alone with grampaw. After a while he opens his eyes and stares at you for a few minutes. He then says, “Did the dog bite you?” You answer, “Yes, sir.” Grampaw then says, “He bites everybody,” and goes back to sleep. Reassured, you light a cigaret. A little boy and girl then come to the door, and, after examining you carefully for several minutes, they burst into giggling laughter and run away. You feel to see if you have forgotten to put on a necktie. A severe looking old lady then enters the room. You rise and bow. “I am Miss Doe's grandmother. Some one has been smoking in here,” she says, and sits down opposite you. Her remark is not, however, a hint for a cigaret and you should not make the mistake of saying, “I've only got Fatimas, but if you care to try one—” It should be your aim to seek to impress yourself favorably upon every member of the young lady's family. Try to engage the grandmother in conversation, taking care to select subjects in which you feel she would be interested. Conversation is largely the art of “playing up” to the other person's favorite subject. In this particular case, for example, it would be a mistake to say to Miss Doe's grandmother, “Have you ever tried making synthetic gin?” or “Do you think any one will EVER lick Dempsey?” A more experienced person, and some one who had studied the hobbies of old people, would probably begin by remarking, “Well, I see that Jeremiah Smith died of cancer Thursday,” or “That was a lovely burial they gave Mrs. Watts, wasn't it?” If you are tactful, you should soon win the old lady's favor completely, so that before long she will tell you all about her rheumatism and what grampaw can and can't eat.

Finally Miss Doe arrives. Her first words are, “Have you been waiting long? Hilda didn't tell me you were here,” to which you reply, “No—I just arrived.” She then says, “Shall we go in the drawing-room?” The answer to this is, “For God's sake, yes!” In a few minutes you find yourself alone in the drawing-room with the lady of your choice and the courtship proper can then begin.

The best way to proceed is gradually to bring the conversation around to the subject of the “modern girl.” After your preliminary remarks about tonsils and adenoids have been thoroughly exhausted, you should suddenly say, “Well I don't think girls—nice girls—are really that way.” She replies, of course, “WHAT way?” You answer, “Oh, the way they are in these modern novels. This ‘petting,' for instance.” She says, “WHAT petting'?” You walk over and sit down on the sofa beside her. “Oh,” you say, “these novelists make me sick—they seem to think that in our generation every time a young man and woman are left alone on a lounge together, they haven't a thing better to do than put out the light and ‘pet.' It's disgusting, isn't it?” “Isn't it?” she agrees and reaching over she accidentally pulls the lamp cord, which puts out the light.

On your first visit you should not stay after 12:30.

The Proper Proposal

About the second or third month of a formal courtship it is customary for the man to propose matrimony, and if the girl has been “out” for three or four years and has several younger sisters coming along, it is customary for her to accept him. They then become “engaged,” and the courtship is concluded.

Innovation: The Attacker’s Advantage

If you believe Thomas Kuhn's theory outlined in The Structure of Scientific Revolutions, then the pace of change happens slowly at first and then all at once.

Innovation: The Attacker's Advantage, an out-of-print book from 1984 takes a timeless look at this theory and applies it to innovation. This is the Innovator's Dilemma long before the innovator's dilemma.

The perspective of Richard Foster, the book's author, is that there is a battle going on in the marketplace between innovators (or attackers) and defenders (who want to maintain their existing advantage).

Some companies have more good years than bad years. What's the secret behind their success? Foster argues it's their willingness to cannibalise “their current products and processes just as they are the most lucrative and begin the search again, over and over.

It is about the inexorable and yet stealthy challenge of new technology and the economics of sub situation which force companies to behave like the mythical phoenix, a bird that periodically crashed to earth in order to rejuvenate itself.

The book isn't about improving process but rather changing your mindset. This is the Attacker's Advantage.

Henry Ford understood this mindset. In My Life and Work, he wrote,

If to petrify is success, all one has to do is to humor the lazy side of the mind; but if to grow is success, then one must wake up anew every morning and keep awake all day. I saw great businesses become but the ghost of a name because someone thought they could be managed just as they were always managed, and though the management may have been most excellent in its day, its excellence consisted in its alertness to its day, and not in slavish following of its yesterdays. Life, as I see it, is not a location, but a journey. Even the man who most feels himself ‘settled' is not settled—he is probably sagging back. Everything is in flux, and was meant to be. Life flows. We may live at the same number of the street, but it is never the same man who lives there.

[…]

It could almost be written down as a formula that when a man begins to think that he at last has found his method, he had better begin a most searching examination of himself to see whether some part of his brain has not gone to sleep.

Foster recognizes that innovation is “born from individual greatness” but exists within the context of a marketplace where the S-curve dominates and questions such as “how much change is possible, when it will occur, and how much it will cost,” are critical factors.

Companies are often blindsided by change. Everything is profitable until it isn't. But leading companies are supposed to have an advantage. Or, are “the advantages outweighed by other inherent disadvantages?” Foster argues this is the case.

The roots of this failure lie in the assumptions behind the key decisions that all companies have to make. Most of the managers of companies that enjoy transitory success assume that tomorrow will be more or less like today. That significant change is unlikely, is unpredictable, and in any case will come slowly. They have thus focused their efforts on making their operations ever more cost effective. While valuing innovation and espousing the latest theories on entrepreneurship, they still believe it is a highly personalized process that cannot be managed or planned to any significant extent. They believe that innovation is risky, more risky than defending their present business.

Some companies make the opposite assumption. They assume tomorrow does not resemble today.

They have assumed that when change comes it will come swiftly. They believe that there are certain patterns of change which are predictable and subject to analysis. They have focused more on being in the right technologies at the right time, being able to protect their positions, and having the best people rather than on becoming ever more efficient in their current lines of business. They believe that innovation is inevitable and manageable. They believe that managing innovation is the key to sustaining high levels of performance for their shareholders. They assume that the innovators, the attackers, will ultimately have the advantage, and they seek to be among those attackers, while not relinquishing the benefits of the present business which they actively defend. They know they will face problems and go through hard times, but they are prepared to weather them. They assume that as risky as innovation is, not innovating is even riskier.

These beliefs are based on a different understanding of competition.

The S-Curve

S-Curve

The S-curve is a graph of the relationship between the effort put into improving a product or process and the results one gets back for the investment. It's called the S-curve because when the results are plotted, what usually appears is a sinuous line shaped like an S, but pulled to the right at the top and pulled to the left at the bottom.

Initially, as funds are put into developing a new product or process, progress is very slow. Then all hell breaks loose as the key knowledge necessary to make advances is put in place. Finally, as more dollars are put into the development of a product or process, it becomes more and more difficult and expensive to make technical progress. Ships don't sail much faster, cash registers don't work much better, and clothes don't get much cleaner. And that is because of limits at the top of the S-curve.

Limits are the key to understanding the S-curve in the innovation context. When we approach a limit “we must change or not progress anymore.” Management's ability to recognize limits and change course becomes key.

If you are at the limit, no matter how hard you try you cannot make progress. As you approach limits, the cost of making progress accelerates dramatically. Therefore, knowing the limit is crucial for a company if it is to anticipate change or at least stop pouring money into something that can't be improved. The problem for most companies is that they never know their limits. They do not systematically seek the one beacon in the night storm that will tell them just how far they can improve their products and processes.

Foster argues that if you don't understand limits and S-curves you get blindsided by change. I think that's too neat of an argument — you can understand limits and S-curves and still get blindsided but the odds are reduced. You can think of the S-curve as the blindsided curve or the attacker's curve depending on your perspective.

For the S-curve to have practical significance there must be technological change in the wind. That is, one competitor must be nearing its limits, while others, perhaps less experienced, are exploring alternative technologies with higher limits. But this is almost always the case. I call the periods of change from one group of products or processes to another, technological discontinuities. There is a break between the S-curves and a new one begins to form. Not from the same knowledge that underlays the old one but from an entirely new and different knowledge base.

I think this argument is starting to sound a lot like the Innovator's Dilemma but 15 years sooner.

Technological discontinuities are arriving with increasing frequency because we're in the early stages of the technological revolution. Eventually these developments will revert to the mean and disruptive innovation will become less frequent and incremental innovation more common. Disruptive innovation favors the attacker whereas incremental favors the incumbent — going from Zero to One will be harder.

As limits are approached incremental improvement becomes increasingly expensive.

At the same time, the possibility of new approaches often emerges—new possibilities that frequently depend on skills not well developed in leader companies. As these attacks are launched, they are often unnoticed by the leader, hidden from view by conventional economic analysis. When the youthful attacker is strong he is quite prepared for battle by virtue of success and training in market niches. The defender, lulled by the security of strong economic performance for a long time and by conventional management wisdom that encourages him to stay his course, and buoyed by faith in evolutionary change, finds it's too late to respond. The final battle is swift and the leader loses.

This means the standard “stick to your knitting” argument becomes contextual and thus psychologically difficult. Sometimes the best strategy may be to move to something unfamiliar. I'd argue that the competitive drive for efficiency makes a lot of companies increasingly fragile. Most dangerous of all, they are blind to their fragility.

The S-curve, limits and attacker's advantages are at the heart of these problems and they also provide the key to solving them. For example, there are people, call them limitists, who have an unusual ability to recognize limits and ways around them. They ought to be hired or promoted. There are others who can spot ways to circumvent limits by switching to new approaches. They are essential too. Imaginary products need to be designed to understand when a competitive threat is likely to become a reality. Hybrid products that seem to be messy assemblages of old and new technologies (like steam ships with sails) can sometimes be essential for competitive success. Companies can set up separate divisions to produce new technologies and products to compete with old ones. S- curves can be sketched and used to anticipate trouble.

None of this is easy. And it won't happen unless the chief executive replaces his search for efficiency with a quest for competitiveness.

[…]

Most top executives understand, I think, that technological change is relevant to them and that it is useless and misleading to label their business as high-tech or low-tech. What they don't have is a picture of the engines of the process by which technology is transformed into competitive advantage and how they can thus get their hands on the throttle.

“If change occurs at the time learning starts to slow,” wrote Phillip Moffitt in a 1980s Esquire article entitled The Dark Side of Excellence, “… then there is a chance to avoid the dramatic deterioration. If we call this the ‘observation point,' when you can see the past and the future, then there is time to reconsider what one is doing.”

Understanding Limits

Limits are important because of what they imply for the future of the business. For example, we know from the S-curve that as the limits are approached it becomes increasingly expensive to carry out further development. This means that a company will have to increase its technical expenditures at a more rapid pace than in the past in order to maintain the same rate of progress of technical advance in the marketplace, or it will have to accept a declining rate of progress. The slower rate of change could make the company more vulnerable to competitive attack or presage price and profit declines. Neither option is very attractive; they both signal a tougher environment ahead as the limits are approached. Being close to the limits means that all the important opportunities to improve the business by improving the technology have been used. If the business is going to continue to grow and prosper in the future, it will have to look to functional skills other than technology—say marketing, manufacturing or purchasing. Said another way, as the limits of a technology are reached, the key factors for success in the business change. The actions and strategies that have been responsible for the successes of the past will no longer suffice for the future. Things will have to change. Discontinuity is on the way. It is the maturing of a technology, that is the approach to a limit, which opens up the possibility of competitors catching up to the recognized market leader. If the competitors better anticipate the future key factors for success, they will move ahead of the market leaders.

[…]

If one knows that the technology has little potential left, that it will be expensive to tap, and that another technology has more potential (that is, is further from its limits), then one can infer that it may be only a matter of time before a technological discontinuity erupts with its almost inevitable competitive consequence.

Thus finding the limit becomes important.

Finding the Limit

All this presumes we know the answer to the question “Limits of what?” The “what,” as Owens Corning expressed it, was the “technical factors of our product that were most important to the customer.” The trick is relating these “technical factors,” which are measurable attributes of the product or process to the factors that customers perceive as important when making their purchase decision. This is often easy enough when selling products to sophisticated industrial users because suppliers and customers alike have come to focus on these variables, for example, the specific fuel consumption of a jet engine or the purity of a chemical. But it is much tougher to understand these relationships in the consumer arena. How does one measure how clean our clothes are? Do we do it the same way at home as the scientists do in the lab? Do we really measure “cleanness,” or its “brightness” or a “fresh smell” or “bounce?” All of these are attributes of “clean” clothes which may have nothing whatsoever to do with how much dirt is in the clothes. … These are complicated questions to answer because different consumers will feel differently about these factors, creating confusion in the lab. Further, once the consumer has expressed his preference it may be difficult to measure that preference in technical terms. For example, what does “fit” mean? What are the limits of “fit”? If the attribute that consumers want cannot be expressed in technical terms, clearly its limit cannot be found.

Further complicating the seemingly simple question of “limits of what?” is the realization that the consumer's passion for more of the attribute may be a function of the levels of the attribute itself.

For example, in the detergent battles of the 1950s, P&G and its competitors were all vying to make a product that would produce the “cleanest” clothes. It was soon discovered that in fact the clothes were about as clean as they could ever get. The dirt had been removed, but the clothes often had acquired a gray, dingy look that the consumer associated with dirt. In fact, the gray look was caused by torn and frayed fibers, but the consumer did not appreciate this apparently arcane technical detail. Rather than fight with consumers P&G decided to capitalize on their misperceptions and add “optical brighteners” to the detergent. These are chemicals that reflect light. When they were added to the detergent and were retained on the clothes, they made the clothes appear brighter and therefore cleaner in the consumer's eyes, even though in the true sense they weren't any cleaner.

The consumers loved it, and bought all the Tide they could get in order to get their clothes “clean,” that is optically bright.

[…]

Another complication with performance parameters is that they keep changing. Frequently this change is due to the consumer's satisfaction with the present levels of product performance; optical brightness in our prior example. This often triggers a change in what customers are looking for. No longer will they be satisfied with optical brightness alone; now they want “bounce” or “fresh smell,” and the basis of competition changes. These changes can be due to a change in the social or economic environment as well. For example, new environmental laws (which led to biodegradable detergents), a change in the price of energy, or the emergence of a heretofore unavailable competitive product like the compact audio disc or high-definition TV. These changes in performance factors should trigger the establishment of new sets of tests and standards for the researchers and engineers involved in new product development. But often they don't. They don't because these changes are time-consuming and expensive to make, and they are difficult to think through. Thus it often appears easier to just not make the change. But, of course, this decision carries with it potentially significant competitive risks.

The people that should see these changing preferences, the salesmen, often do not because they have a strong incentive to sell today's products. So the very people that organization has put into place to stay close to the customer often fail to keep the organization informed of a changing landscape. And if they do, it's still a complicated process to get companies to act on that information.

… The people we rely on to keep us close to the customer and new developments often do not. So our structure and systems work to confirm our disposition to keep doing things the same way. As Alan Kantrow, editor at the Harvard Business Review, puts it, “Our receptor sites are carrying the same chemical codes that we carry. We are thus likely to see only what we expect and want to see.” The chief executive says, “I've done good things. We're scanning our environment.” But in fact he is scanning his own mind

Even if sales and marketing do perceive the need for change, they may not take their discovery back to their tech nical departments for consideration. If the technical departments do hear about these developments, they may not be able to do much about them because of the press of other projects. So all in all, changes in customer preferences get transmitted slowly, usually only after special studies are done specifically to examine changing customer preferences. All this means that answering the “limits of what” question can be tricky under the best of circumstances, and much tougher in an ongoing business.

There are limits to limits of course. First, just because you're approaching a limit doesn't meant there is an effective substitute that can solve the problem better. However, “if there is an alternative, and it is economic, then the way the competitors do battle in the industry will change.” Second, it's possible to be wrong about limits and thus draw the wrong conclusions.

A great example of this is Simon Newcomb, the celebrated astronomer, who in 1900 said “The demonstration that no possible combination of known substances, known forms of machinery and known forms of force, can be united in a practical machine by which men shall fly long distances through the air, seems to the writer as complete as it is possible for the demonstration to be.” Two years later he clarified, “Flight by machines heavier than air is unpractical and insignificant, if not utterly impossible.” It wasn't even a year before the Wright brothers proved him wrong at Kitty Hawk.

Diminishing Returns

One mistake we make is to confuse time and effort.

It is not the passage of time that leads to progress, but the application of effort. If we plotted our results versus time, we could not by extrapolation draw any conclusion about the future because we would have buried in our time chart implicit assumptions about the rate of effort applied. If we were to change this rate, it would increase or decrease the time it would take for performance to improve. People frequently make the error of trying to plot technological progress versus time and then find the predictions don't come to pass. Most of the reason for this is not the difficulty of predicting how the technology will evolve, since we have found the S-curve to be rather stable, but rather predicting the rate at which competitors will spend money to develop the technology. The forecasting error is a result of bad competitive analysis, not bad technology analysis.

Thus, it might appear that a technology still has a great potential but in fact what is fuelling its advance is rapidly increasing amounts of investment.

Psychologically, we believe the more effort we put in the more results we should see. This has disastrous effects in organizations unable to recognize limits.

S-Curve pairs

Often there is more than one S-curve, the gap between them represents a discontinuity.

Efficiency Versus Effectiveness

Effectiveness is set when a company determines which S-curve it will pursue (e.g., vacuum tubes or solid state). Efficiency is the slope of the present curve. Effectiveness deals with sustaining a strategy-efficiency with the present utilization of resources. Moving into a new technology almost always appears to be less efficient than staying with the present technology because of the need to bring the new technology up to speed. The cost of progress of an established technology is compared with that of one in its infancy, even though it may eventually cost much less to bring the new technology up to the state of the art than it did to bring the present one there. To paraphrase a comment I've heard many times at budget meetings: “In any case the new technology development cost is above and beyond what we're already paying. Since it doesn't get us any further than we presently are, it cannot make sense.” The problem with that argument is that someday it will be ten or twenty or thirty times more efficient to invest in the new technology, and it will outperform the existing technology by a wide margin.

There are many decisions that put effectiveness and efficiency at odds with each other, particularly those involving resource allocation. This is one of the toughest areas to come to grips with because it means withdrawing resources from the maturing business.

[…]

In addition, many companies have management policies that, interpreted literally, impede moving from one S-curve to another. For example, “Our first priority will be to protect our existing businesses.” Or “We will operate each business on a self-sustaining basis; each will have to provide its own cash as well as make a contribution to corporate overhead.” These rules are established either in a period of relaxed competition or out of political necessity.

The fundamental dilemma is that it always appears to be more economic to protect the old business than to feed the new one at least until competitors pursuing the new approach get the upper hand. Conventional financial theory has no practical way to take account of the opportunity cost of not investing in the new technology. If it did, the decision to invest in the present technology would often be reversed.

Metrics become distorted and defenders believe they are more productive than they are. Attackers and defenders look at productivity differently.

Even if a defender succeeds in managing his own S-curve better, chances are he will not be able to raise his efficiency by more than, say, 50 percent. Not much use against an attacker whose productivity might be climbing ten times faster because he has chosen a different S-curve. All too frequently the defender believes his productivity is actually higher than his attacker's and ignores what the attacker potentially may have to offer the customer. Defenders and attackers often have a different perspective when it comes to judging productivity. For the attacker, productivity is the improvement in performance of his new product over his old product divided by the effort he puts into developing the new product. If his technology is beginning to approach the steep part of its S-curve, this could be a big number. The defender, however, observes the productivity through the eyes of the market, which may still be treating the new product as not much more than a curiosity. So in his eyes the attacker's productivity is quite low. We've seen this happen time and again in the electronics industry. Products such as microwaves, audio cassettes and floppy discs failed at first to meet customer standards, but then, almost overnight, they set new high-quality standards and stormed the market.

Even if the defender admits that the attacker's product may have an edge, he is likely to say it is too small to matter. Since the first version of a wholly new product is frequently just marginally better than the existing product, the defender often thinks the attacker's productivity is lower, not higher than his own. The danger comes in using this erroneous perception to figure out what is going to happen next. Too often defenders err by thinking that the attacker's second generation new product will require enormous resources and result in little progress. We know differently. We know from the mathematics of adolescent S-curves that once the first crack appears in the market dam, the flood cannot be far behind. And further, it won't cost nearly as much since the first product has absorbed much of the start-up costs. No doubt this will be a big shock to the defender who will tell the stock market analysts, “Well, the attacker was just lucky. There was nothing in his record to suggest he could have pulled this thing off.” All true. From the defender's viewpoint there was nothing in the attacker's record to suggest that a change was coming. But the underlying forces were at work nevertheless, and in the end they appeared.

Innovation: The Attacker's Advantage explores why leaders lose and what you can do about it.

Henry Miller on Turning 80, Fighting Evil, And Why Life is the Best Teacher

Henry Miller On Turning Eighty

 

Only 200 copies of Henry Miller's 1972 chapbook, On Turning Eighty, were ever printed; each hand-numbered and signed. How I ended up with copy 48 is a story for another day.

The book contains 3 essays, one of which is on aging and living a fulfilling life.

Learning life-lessons from some of the wisest people has long fascinated me. And Miller's short essay is full of them.

 

Henry Miller Chapbook

Reflecting back on his many lessons, Miller reframes success into the little things.

If at eighty you’re not a cripple or an invalid, if you have your health, if you still enjoy a good walk, a good meal (with all the trimmings), if you can sleep without first taking a pill, if birds and flowers, mountains and sea still inspire you, you are a most fortunate individual and you should get down on your knees morning and night and thank the good Lord for his savin’ and keepin’ power. If you are young in years but already weary in spirit, already on the way to becoming an automaton, it may do you good to say to your boss — under your breath, of course — “Fuck you, Jack! You don’t own me!” … If you can fall in love again and again, if you can forgive your parents for the crime of bringing you into the world, if you are content to get nowhere, just take each day as it comes, if you can forgive as well as forget, if you can keep from growing sour, surly, bitter and cynical, man you’ve got it half licked.

It's the little things that matter, not fame, success, wealth.

He also colorfully comments on the fundamental nature of people and our relatively unchanging views on them.

Despite the knowledge of the world which comes from wide experience, despite the acquisition of a viable everyday philosophy, one can't help but realize that the fools have become even more foolish and the bores more boring.

[…]

One thing seems more and more evident to me now — people’s basic character does not change over the years. … Far from improving them, success usually accentuates their faults or short-comings. The brilliant guys at school often turn out to be not so brilliant once they are out in the world. If you disliked or despised certain lads in your class you will dislike them even more when they become financiers, statesmen or five star generals. Life forces us to learn a few lessons, but not necessarily to grow.

In a passage that reminds me of Alan Watts, Miller praises living in the here and now and reflects on the cheerfulness brought of old age.

The future of the world is something for philosophers and visionaries to ponder on. All we ever really have is the present, but very few of us ever live it. I an neither a pessimist nor an optimist. To me the world is neither this nor that, but all things at once, and to each according to his vision.

Marcus Aurelius

At eighty I believe I am a far more cheerful person than I was at twenty or thirty. I most definitely would not want to be a teenager again. Youth may be glorious, but it is also painful to endure. Moreover, what is called youth is not youth in my opinion, it is rather something like premature old age.

I was cursed or blessed with a prolonged adolescence; I arrived at some seeming maturity when I was past thirty. It was only in my forties that I really began to feel young. By then I was ready for it. (Picasso once said: “One starts to get young at the age of sixty, and then it’s too late.”) By this time I had lost many illusions, but fortunately not my enthusiasm, nor the joy of living, nor my unquenchable curiosity. Perhaps it was this curiosity—about anything and everything—that made me the writer I am. It has never left me. Even the worst bore can elicit my interest, if I am in the mood to listen.

With this attribute goes another which I prize above everything else, and that is the sense of wonder. No matter how restricted my world may become I cannot imagine it leaving me void of wonder. In a sense I suppose it might be called my religion. I do not ask how it came about, this creation in which we swim, but only to enjoy and appreciate it.

Henry Miller

Reflecting on the value of learning from idiots, Miller writes that life is the ultimate teacher.

I think the teacher (with a capital T) ranks with the sage and the seer. It is our misfortune not to be able to breed such animals. What is called education is to me utter nonsense and detrimental to growth. Despite all the social and political upheavals we have been through the authorized educational methods throughout the civilized world remain, in my mind at least, archaic and stultifying. They help to perpetuate the ills which cripple us. William Blake said: “The tigers of wrath are wider than the horses of instruction.” I learned nothing of value at school. I don't believe I could pass a grammar school test on any subject even today. I learned more from idiots and nobodies than from professors of this and that. Life is the teacher, not the Board of Education.

Part of living in the present is an Epicurean desire for enjoyment and making a conscious choice, in old age, to not know certain ills.

I don't believe in health foods or diets either. I have probably been eating all of the wrong things all of my life — and I have thrived on it. I eat to enjoy my food. Whatever I do I do first for enjoyment. I don't believe in regular check-ups. If there is something wrong with me, I'd rather not know about it, because then I could only worry about it and aggravate the condition. Nature often remedies our ills better than the doctor can. I don't believe there is a prescription for a long life. Besides, who wants to live to be a hundred? What's the point of it? A short life and a merry one is far better than a long life sustained by fear, caution and perpetual medical surveillance. With all the progress medicine has made over the years we still have a pantheon of incurable diseases. The germs and microbes seem to have the last word always. When all else fails the surgeon steps in, cuts us to pieces, and clears us out of our last penny. And that's progress for you.

The best part about growing old is the sense of context that allows you to really learn what is truly important.

Perhaps the most comforting thing about growing old gracefully is the increasing ability not to take things too seriously. One of the big differences between a genuine sage and a preacher is gayety. When the sage laughs it is a belly laugh; when the preacher laughs, which is all too seldom, it is on the wrong side of the face. …

With advancing age my ideals, which I usually deny possessing, have definitely altered. My ideal is to be free of ideals, free of principles, free of isms and ideologies. I want to take to the ocean of life like a fish takes to the sea. As a young man I was greatly concerned about the state of the world, today, though I still rant and rave, I am content simply to deplore the state of affairs. It may sound smug to speak thus but in reality it means that I have become more humble, more aware of my limitations and those of my fellow man. I no longer try to convert people to my view of things, nor to heal them. Neither do I feel superior because they appear to be lacking in intelligence.

He continues with perhaps my favorite passage … on the contrast between stupidity and evil.

One can fight evil but against stupidity one is helpless. … I have accepted the fact, hard as it may be, that human beings are inclined to behave in ways that would make animals blush. The ironic, the tragic thing is that we often behave in ignoble fashion from what we consider the highest motives. The animal makes no excuse for killing his prey; the human animal, on the other hand, can invoke God’s blessing when massacring his fellow men. He forgets that God is not on his side but at his side.

***

On Turning Eighty, is a wonderfully fascinating read on the perspective that 80 years gives you.