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Ten interesting things we read this week
Some of the most fascinating topics covered this week are: Leadership (Team management lessons from a naval captain), Business (When bosses shared their profits; Make your next pitch instantly more compelling by using this one philosopher's framework), Technology (India Inc wakes up to march of the machines) and Productivity (You need to ask yourself this question every day)
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This article talks about one of the best books on management as per Peter Kaufman, Chairman and CEO of Glenair, a business whom Charlie Munger classifies as one of the best three operating companies he’s aware of. 'It’s Your Ship’ is the story of Captain D. Michael Abrashoff, the commanding officer of USS Benfold. The book outlines how, by unconventional means, Abrashoff tapped into the latent human potential aboard Benfold to turn it into the ‘gem of the ocean’.
The Captain challenged Navy procedure to transform a complex organisation. He improvised techniques to build morale and unity. He created a new environment comprising a company of collaborators who flourished in a spirit of relaxed discipline, creativity humour and pride. Benfold went on to beat nearly every metric in the Pacific fleet and frequently the crew beat the existing record.
On empowerment, Mr. Abrashoff writes, “I found the more control I gave up, the more control I got. In the beginning, people kept asking my permission to do things. Eventually, I told the crew, ‘It’s your ship. You’re responsible for it. Make a decision and see what happens.’ Hence the Benfold watchword was ‘It’s your ship.’ Every sailor felt that Benfold was his or her responsibility. Show me an organization in which employees take ownership, and I will show you one that beats its competitors.” The characteristics that defined USS Benfold’s success weren’t quantitative. They were qualitative and they were all about people. The physical asset, the ship, was no different to any other in the fleet; it was the people that made all the difference. Isn’t that same with businesses?
2) A managerial quality that is hard to define but important to possess [Source: The Economist]
In this pandemic, many have taken a lot of tough decisions. Managers, faced with tough calls like which parts of their operations to close, have not been spared. Politicians had to take calls on extending the lockdown. Companies on laying off or cutting salaries. Good judgment is a quality everyone would like to have. But it is remarkably difficult to define precisely, and many people are not sure whether they personally possess it. Sir Andrew Likierman of the London Business School has spent a long time talking to leaders in a wide range of fields, from business and the army to the law and medicine, in an effort to create a framework for understanding judgment.
He suggests that judgment is “the combination of personal qualities with relevant knowledge and experience to form opinions and take decisions”. Expertise can be useful in making judgments. But it is not the same thing. “Academics have expertise,” Sir Andrew observes. “They don’t necessarily have judgment.” People with judgment know when they are out of their depth in making a decision and typically then seek the advice of someone who has the right background and knowledge. The world is full of people whose lack of judgment brought their careers or personal life crashing down. Many made the common mistake of assuming everything was fine.
As artificial intelligence gets used for more and more routine tasks in the service sector, exercising judgment may be one area where humans retain an edge over machines. This is far from certain, however. What people perceive as good judgment may stem from the ability to spot certain cues in the environment. This ability may be unconscious, just as a dog can catch a Frisbee in mid-air without knowing how to calculate wind speed and air resistance. As machines can be taught, so do humans. In the long run, one of the trickiest aspects of human judgment may be knowing precisely when to let machines take decisions and when to leave it to people.
3) When bosses shared their profits [Source: NY Times]
Businesses should resume their profit-sharing model which has declined since 1980s. That’s what the author of this piece thinks. The original idea for businesses to share profits with workers emerged from the tumultuous period when America shifted from farm to factory. He talks about Sears, Roebuck and Co., one of America’s largest corporations, with 30,000 to 40,000 employees, which announced a major experiment in profit-sharing in 1916. The company would contribute 5% of net earnings, without deduction of dividends to shareholders, into a profit-sharing fund. Sears’s plan was admirably egalitarian. By the 1950s, Sears workers owned a quarter of the company. By 1968, the typical Sears salesman could retire with a nest egg worth well over $1 million in today’s dollars.
Profit-sharing did give workers an incentive to be more productive. It also reduced the need for layoffs during recessions, because payroll costs dropped as profits did. But it subjected workers to the risk that when profits were down, their paychecks would shrink. And if a company went bankrupt, they’d lose all their investments in it. The best profit-sharing plans came in the form of cash bonuses that employees could invest however they wished, on top of predictable base wages. Since 2000, the portion of total national income going to American workers has dropped farther than in other rich nations. A steadily larger portion has gone into corporate profits, which have been reflected in higher share prices. But a buoyant stock market doesn’t help most Americans. The richest 1 percent now own half the value of all shares of stock; the richest 10 percent, 92 percent.
If Amazon’s 840,000 employees owned the same proportion of their employer’s stock as Sears workers did in the 1950s, a quarter of the company, each would now own shares worth an average of about $386,904. According to the author, there are many ways to encourage profit-sharing. During this pandemic, for example, Congress should prohibit the Treasury or the Federal Reserve from bailing out any corporation that doesn’t share its profits with its employees. Sharing the profits with all workers is a logical and necessary first step to making capitalism work for the many, not the few.
4) 5 personality traits that make you mentally tough [Source: Darius Foroux]
The author of this piece came across a 2019 study on professional athletes while he was researching on mental toughness. There were five personality traits that were predictive of success in sports. These traits can work as a guideline for gaining more mental toughness. 1) Ego-Strength: In the study, they define ego as “A measure of one’s capacity to handle setbacks, criticism, and rejection.” So, one shouldn’t suppress ego. If you score high on ego-strength, you’re less affected by failure and setbacks. If you score low, you are affected by failure, criticism, and rejection. And you’ll have a hard time bouncing back.
2) Level-Headedness: Mentally tough athletes remain composed in stress-inducing situations. This is a critical trait of mental toughness. When you’re confronted with a situation that raises your heart rate, you want to avoid an emotional response. No matter what’s the situation, reacting emotionally will only harm you and others. 3) Stress-Tolerance: This trait is about your ability to deal with high stakes. How do you deal with possible negative consequences? Whatever happens, never allow fear of negative consequences cripple you.
4) Energy/Persistence: In the study, they describe this as “A measure of one’s potential to sustain a high level of activity over extended periods.” Think of learning a skill, getting a degree, building a career, writing a book, creating a movie, etc. All that stuff requires energy and persistence. The key is to manage our energy so we can stay active and persistent in overcoming our challenges. 5) Thoroughness: Mental toughness is not only about doing your job, it’s about doing it well. And to succeed at anything in life, you need to be thorough. You don’t get points for doing a sloppy job. Finally, mental toughness is not about outcomes. It’s about challenging yourself and becoming a better—more complete—person.
Feedback is something that’s necessary to succeed. Negative feedback is something that everyone comes across at some time or the other. As reported by the New York Times, organizational psychologist Adam Grant says that when we’re confronted with negative feedback, our ego is so threatened that our brains limit incoming information. “We regulate to avoid taking in harsh critiques.” But luckily, there are ways to translate that feedback into a positive, even performance-boosting experience. So, here are few tips for keeping an open mind and extracting the most value from a negative review.
1) Preempt negative feedback: As soon as you catch wind of a client, colleague or manager’s displeasure, take a proactive stance and try to determine what went wrong. 2) Slow down and ask questions: There is a lot we can learn from user-generated reviews. When people are inspired to contribute reviews, they tend to be emotional, for better or worse. On the other end, as business owners, difficult feedback can really sting. Slow down and dig deeper before going with your knee-jerk reaction. 3) Think of feedback as a learning tool: Think of constructive criticism like an objective diagnosis — you can use it both to understand what went wrong and figure out how to improve. As Bill Gates said, “Your most unhappy customers are your greatest source of learning.”
4) Separate the criticism from the self: It’s easy to mistake feedback for a judgment about who we are. According to Dr. Martin Paulus, a psychiatry professor at UC San Diego, it’s crucial to separate criticism from our sense of self. 5) Remember the success of MIPs: The National Basketball Association dedicates the Most Improved Player (MIP) Award every year to the player who has made the most progress during the regular season. Even if you can’t win the most valuable player, you can still aim for MIP and garner goodwill and loyalty along the way. Finally, we all need to keep this in mind that the people who criticize us end up being our biggest advocates — as long as we rise to the occasion and deal with their feedback head-on. 6) India Inc wakes up to march of the machines [Source: Livemint]
The ongoing stop-and-restart of lockdown all over India has resulted in companies losing huge amounts. In the last one month, across the country, different manufacturers had to temporarily suspend operations as employees tested positive for Covid-19. Such disruptions have bolstered the case for more automation in Indian factories—a significant change as Indian business has always preferred cheap labour to expensive machines. Now, nearly every large and small company’s scenario planning is about doing more stuff with technology.
Machines, unlike men, can ensure contact-less manufacturing. Little surprise, companies selling automation solutions have reported spikes in demand. Robot maker Universal Robots said enquiries from fast-moving consumer goods (FMCG) companies are up by 10-15% (the medical equipment sector is understandably reporting 50% growth in enquiries) compared to pre-Covid months. Milagrow HumanTech, a maker of service robots, said that unit sales of robotic vacuum cleaners jumped 400% in the June quarter compared to the same year-ago period. On the software side, IBM cited a three to four times increase in the number of requests from mid to large companies to automate processes.
A 2019 study by MGI found that in India, 44 million men and 12 million women were at risk of being displaced by automation by 2030. MGI chalked out different scenarios and these assumptions reflected a “mid-point" scenario. That displacement could occur much sooner with the Covid-19 reset. While some companies’ plants in India are somewhat automated, India ranks low in the pecking order of robotic adoption. India ranks 11th in annual robot installations globally with under 5,000 units installed in 2018, data from the International Federation of Robotics showed. In comparison, China installed 154,000 robots and Japan 55,000. The task ahead, for governments and corporates, is cut out. They have to shore up small businesses and workers through access to affordable technology, skilling, basic social security. And, focus on data sharing agreements. 7) For maximum productivity, make sure to ask this question a few times a day [Source: inc.com]
With most of us working from home in this lockdown/crisis, balancing between office work and household chores has become a task. In such a time, being productive is important. But spending too much time on work that doesn’t really matter is what hurts productivity. Your best chance of breaking out of that reactive mode is if something unexpected happens--such as someone interrupting your work. Most of us are working at home these days, and that means we can be interrupted by family members at any time.
An interruption that breaks your train of thought or the flow of your work is a rare moment when your mind can fully focus on what neuroscientist Josh Davis says is the most important question: "What's important today?" Look at your work from that viewpoint and you may well decide that you should be spending your time and energy on something else. What if you're lucky (or unlucky) enough to have no interruptions during your workday?
Then you should schedule your own interruptions, Davis advises. "Stand up and walk down the hall," he says. "It has to be a no-device walk, because if you have a device with you, you're going to be reacting to it." Walk around for a couple of minutes and ask yourself that question about what's important today. "When everyone is working from home, what's work? What's life?" he says. "We have to make so many more decisions about how to use our time than ever before. If you can capture these moments as decision points, it can make you more productive." 8) Raghuram Rajan: Pandemic’s economic hit will be here ‘for a long time’ even if a vaccine is approved [Source: CNBC]
Covid-19 has hit hard many businesses, especially the small and medium-sized businesses. When will the situation normalize? According to Raghuram Rajan, a professor of finance at the University of Chicago’s Booth School of Business, a large number of small businesses that closed in March, when restrictions around social movements went into effect, are not going to reopen even when the situation improves. “As this goes on, more and more businesses find that a long period without revenue, but high cost, implies that they simply don’t have a chance, and they’re closing down,” Mr. Rajan said.
Mr. Rajan thinks that even if several candidates get approval for vaccine by as early as 4Q, the damage would have been done by then. “You have to vaccinate a lot of people. So, the earliest people are going to feel safe going into crowded restaurants is probably going to be by the middle of next year. If everything goes according to plan — things are not going to go according to plan,” he said.
“You don’t get a full economy back until there is greater confidence for people to mingle, until the high-contact services like restaurants, travel, tourism – all those can open up again. Till then, you’re at a 95% economy,” Mr. Rajan said, adding that countries need to now start thinking about providing long-term support to affected sectors. Experts have previously warned that the pandemic could lead to more protectionism around the world as countries attempt to safeguard their domestic industries. For his part, Mr. Rajan said that a rise in protectionism will further delay economic recovery.
9) Make your next pitch instantly more compelling by using this one philosopher's framework [Source: entrepreneur.com]
If you want to draft a successful sales pitch, this article is all that you need. Twentieth-century British philosopher Paul Grice shifted the way we think about semantics and language. His maxims for conversation are part of his work on the cooperative principle, which states that when people engage with one another there are unspoken assumptions around how the conversation will unfold. Here’s how you can use Grice’s four maxims to capture anyone’s attention on command.
1) Say what is needed and nothing more: The maxim of quantity states that excess information will ultimately clutter your story or position. Ever check out of a conversation because the person talking keeps going off on tangents? This is why you should be sharpening your elevator pitch all the time. A good rule of thumb for editing is to ask yourself “So what?” at the end of each sentence or story detail. If your language doesn’t actually propel your message forward, leave it out. 2) Back up what you say: Grice’s maxim of quality has two components – Tell the truth, and back up what you say with evidence, preferably scientific in nature. According to this maxim, the natural disposition of a listener is to corroborate your argument in some way; anticipate this skepticism and you’ll do a better job holding someone’s rapt attention.
3) Keep it relevant: Gary Vaynerchuk, a Belarusian-American entrepreneur, points out that while “content is king,” context is God. It’s true; you can barrage your listener with anecdotes or tangents, but will sleek catchphrases and one-liners really add to your conversation or argument in the long run? 4) Stay organized as you speak: Grice’s final maxim asks us to “be perspicuous,” which means to be clear and easy to understand. This maxim refers more to your actual word choices; the more muddled your language, the harder it becomes to follow you. Most people are wired to listen and filter for these maxims automatically. Stay in bounds, keep your message clear and to the point, and you’ll have everything you need to captivate listeners the next time you have an important audience.
January, before Covid-19 upended everything, feels like a different lifetime. March is already a blur. Time slows when you experience surprise, and every day of 2020 brings a new shock. So the recent past feels like distant history. To have any hope of making sense of what’s happening in 2020, we have to pay attention to a bunch of seemingly unrelated stories that began before anyone had heard of Covid-19. 1) People grew apart financially at the same time they became connected digitally, which exacerbates tribal instincts and exposes you to people who don’t see the world as you do, who become easy targets for criticism and blame. When you’re exposed to people who are experiencing a different world than you are it becomes easy to ask, “Why don’t I have what they have?”
2) A century-long shift away from labor-intensive jobs towards creative-thinking jobs creates a stark contrast between jobs that can be done during a pandemic and jobs that can’t. For most of history people worked with their arms, legs, and backs. They labored. Then computers came along and more people started working with their brains, doing creative and service jobs. 3) Things have been pretty good for a long time. So a setback, even if it’s not unprecedented, feels overwhelming. In 1900 roughly 800 per 100,000 Americans died each year from infectious disease. By 2014 that was 45.6 per 100,000 – a 94% decline. What was a tragic but expected part of life 100 years ago is now a tragic and inconceivable part of life in 2020. 4) Local news gave way to national news which gave way to global news, which can make the world feel perpetually broken because there is always a tragedy somewhere, and now you are guaranteed to hear about it. Information was harder to disseminate over distances, and what was going on in other parts of the country or the world just wasn’t your top concern – information was local because life was local. Radio changed that in a big way. It connected people to a common source of information. TV did it even more. The internet took it to the next level. Digital news killed local papers and made information global. 5) The Federal Reserve learned how to keep the financial system from falling apart. That’s both kept a lot of the economy humming and ruined a lot of assumptions people had about how the economy works.
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