I have always been interested in what the most powerful / smart / successful people in the world do after they create their great work or leave their high-profile positions.  Where is the afterparty?  Do they move to the background and pull the strings that control the puppets that run the rest of the world?  Do they just retire into the freedom of the caribbean?  Do they make symbolic gestures or motivate big changes in the world? Do they work harder than ever?  Surely, some do each of these things.

Upon first reflection, several names come to mind.  JD Salinger.  Al Gore.  Eli Broad.  Bill Clinton.  Nathan Myhrvold (see previous post). Several recent names have highlighted this issue.  Take Sandra Day O’Connor or Evan Bayh.  For O’Connor, she was a supreme court justice for 25 years and the first woman to ever reach the high court.  There is not much room to go up from there.  For Evan Bayh, he was a political scion / heir-apparent (his dad was a US senator) who lived up to his famiy reputation to become a 2-term state governor and then a 2-term US senator.  Of these, Evan Bayh is a bit more interesting, as it is much more intriguing to see what happens when someone is still young after their notable work than if they are more retirement-age.  Sandra Day O’Connor (age 79) has taken up a position as a social commentator and paid speaker, essentially doing a well-earned victory lap.  Evan Bayh just turned 54.  He has mentioned everything from becoming a CEO to a university president, but is “leaving his options open.”

That’s it, I’m checking out.  JD Salinger never wanted to be famous are avoided it at all costs.  He wrote in “The Catcher in the Rye” of his main character Holden Caulfield hating “phonies” and wanting to go live in a cabin alone where he wouldn’t have to talk with anyone. In a sense, that is exactly what JD Salinger did, moving out of New York after achieving some success to a secluded existence on 90 acres in Cornish, New Hampshire. He is reported to have written extensively for the rest of his life – in more than 50 years of isolation – without publishing much of anything.  What did he write?  Will any of us ‘phonies’ ever see any of it?  One of the greatest American writers in history, but he doesn’t think anyone deserves to share his work.  How many other Howard Hughes /  JD Salinger / or other scientific or literary or mathematical genius types through history have just checked out and simply cut themselves off?  I’m sure historians could put together a pretty high-powered list.

Power brokers.  Bill Clinton was a US governor at 32 years old, president by 46.  After two terms as the most powerful man on Earth he was done by the time he was 54.  Then what?  He became the pre-eminent power broker in the democratic party and has invested his time heavily in the Clinton Global Initiative, a high-powered group designed to bring powerful business leaders, former heads of state, nobel prize winners, and other influential people together in a call-to-action to help improve the global condition.  In this role he has been able to continue his hold on influence and has enormous sway as a world-wide power broker.

Save the World.  Bill Gates holds mythical status in modern society for a variety of reasons, not the least of which is his title as the “richest man in the world.” He is a well-respected techie and business leader. In 2009 he mostly checked out of the company that had created him to do something bigger.  With the Gates Foundation (see previous post) he has created an organization that is already the world-leader in making philanthropy more like a business with clear goals and huge impact.  By managing his foundation more closely, he can write a letter to stakeholders like the one he recently released, talking about the 250 million children he is saving with one new vaccine, and the 500 million starving people he is helping to feeed with new drought resistance crops.  I exaggerate, but only a little.  Gates has traded in making money for saving and improving lives.  In a sense, Al Gore has done the same, but more focused on a single cause (climate change). Gore now has an Oscar and a Nobel prize to console him as he curses the hanging chads in Florida’s election ballots.

Get Richer.  More than a few people upon exiting their high-profile situations just turn their genius-power, public service history, or other notariety into bigger bucks. Names that might get mentioned here include anyone from Nathan Myhrvold (his “Intellectual Ventures” is not exactly a non-profit) to Elon Musk (PayPal to SpaceX andTesla Motors) and other serial-entrepreneurs. Given the other ambitions on this list (saving the world or enhancing the arts) this may seem like a selfish play with one’s talents, and maybe it is, but we can’t fault talented people from creating companies, creating new jobs, and creating wealth.  It is no less than the American way.

Enhance the Arts.  Eli Broad has had wild success, building two Fortune 500 companies (KB Homes and SunAmerica Financial). In a sense, he gets the title of “get richer” together with his fascination with the arts for going back after making his fortune to try to do it again with company #2.  He currently is a noted philanthropist, focusing his efforts on a variety of efforts from improving K-12 education to supporting stem cell research and his named business school. However, a huge focus for Broad has been on the arts.  In addition to holding one of the greatest private art collections in the world, he has given endlessly to support museums and to protect and provide access to the arts.

On and On…. This list could go on and on. In coming years it will be interesting to see what Obama, Bayh, and others do with their new-found freedom.

http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_gladwell

Malcolm Gladwell is clever.  Anyone who has read his books can quickly deduce this.  However, perhaps what is most clever about Malcolm Gladwell is that he recognizes that cleverness is not necessarily all about being smart.  In fact, most of the truly great things that people get credit for were not really invented by them.  Henry Ford did not invent much truly new, he just was exceptional at making it work together.  Andrew Hargadon had a recent post on his blog about this issue as well, but for every great invention / business / whatever you can name, I can find three people who could probably lay claim at the idea first. It’s not that ideas are not precious, or necessary, it’s just that they are not enough.  Malcolm Gladwell is best known for several books (Tipping Point, Blink, etc.) that take well established ideas from many domains, repackage and add new insights, and make him into an icon.  The fact that most of these ideas are not original Gladwell creations does not diminish his contribution, and he’d be the first to tell you it was not all him.  It’s about putting things together in the right context, with the right people, and sometimes the right business model.

This simple insight could be pretty influential for those who seek big ideas.  Be an idea harvester, not just an idea creator.

For many people, the biggest issue in politics today is jobs. To me, it seems that America could learn a lot from Mr. Jobs about creating jobs.

From the beginning, Steve Jobs was an imaginative and farsighted thinker.  He built Apple into one of the most valuable companies in the world by focusing on two things: 1.) Creating value for people with innovative products that simplified people’s lives and 2.) Constructing new markets from scratch for these products.

Apple is really just a tremendously successful construction company. [Market Construction]

Think of all of Apple’s biggest revenue drivers: iPod, iPad, iPhone, iTunes ß each of these constructed a new market from scratch. Apple has excelled because they construct new markets that create value in people’s lives.

Why is it so great to be in the [market] construction business? There are big advantages to this approach: Better margins, less competition, more job growth, and first mover advantages.  When you pioneer, you set the standards – just ask Mark Zuckerberg at Facebook!

The market construction business is not easy, but it’s worth it. Market construction requires a different frame of thinking. The questions revolve around what could be rather than what is. Leaders think about how customers might re-imagine their experience of a product (think Apple’s mouse for computer interaction; mobile music libraries; a person’s entire life in their pocket command center). Market construction also requires a different approach to marketing / development. Questions become: Who is the customer? (You must find them because they don’t know they need you yet). What do they want from the product? (They don’t know yet.  You have to educate them). What is the right price point? (You decide, based on the value you create for customers).

For America, real and substantial job growth will come from innovative market construction. Simply, America needs to get back into the construction business

America has struggled to truly transition from ‘old industries’ where we had strong capabilities (for example, the auto industry, textile industry, and most manufacturing industries) into ‘new economy’ markets that are only beginning to emerge.

The good news is that America is exceptionally well prepared to lead in this century, but we will need to follow Apple’s example of leading on new frontiers.

The biggest areas for growth in the next 20 years, essentially the real estate with the largest “green fields” ready for market construction, will likely be in the areas of: Life sciences (personalized medicine), technical services, green technology, new sources of power generation, nanotech, pharma / medical devices.

The government can play an important role in four key ways:

  1. Fund basic science (in areas too expensive for industry to drive cost effectively)
  2. Aid fast growing companies however they can (particularly in ‘targeted’ industries)
  3. Support business-enabling infrastructure (infrastructure bank, high speed rail)
  4. Get out of the way (avoid regulatory interference)

Essentially, the government can double down on [market] construction.

Steve Jobs was a visionary. America could use a new generation of visionaries that put on their hard hats as market construction engineers and deliver the jobs of the future.

For more, I was part of a panel on “To the Point with Warren Olney” on PRI/NPR talking about these issues: click here for a link to the broadcast of the show.

 

Is everything a Remix?

Kirby Ferguson has put together a fantastic short video series that nicely describes an idea I’ve been trying to highlight in my research for a long time – that very few “breakthroughs” are really about creating something truly new, but instead are more about copying, slightly transforming, and combining other people’s ideas.

Simply: breakthroughs are a myth, and copying is king.

In the series of 3 videos linked to below, he shows how even masterful / novel contributions to music (video 1, highlighting Led Zeppelin), movies (video 2, highlighting Star Wars), and technology (video 3, highlighting Xerox before the Mac) are really remixes. Very powerful ideas that run counter to society’s views on creativity!

 

Everything is a Remix Part 1 from Kirby Ferguson on Vimeo.

Could the Oracle of Omaha have made a mistake?

All people are subject to biases that influence the way we see and interpret information.  These biases tend to be deeply rooted in our experiences, and are usually very helpful in making effective decisions.  As researchers we have found that often top executives are particularly subject to such cognitive biases.  Very powerful CEOs are especially vulnerable as their judgment has served them well through the years.  The issue in the Lubrizol situation is probably not that Warren Buffet intentionally white-washed the insider trading situation to his shareholders – it is more likely that he has been viewing the situation through the lens of his experiences – which tells him that David Sokol would not engage in such behavior.  Several specific biases could be at work.  As David Sokol is a lot like Warren Buffett – also born and raised in Omaha, wealthy, successful, and generally conservative with Midwestern values – he may be subject to a type of similarity or projection bias in which Mr. Buffett projects his own extremely strong personal values onto David Sokol.  Mr. Buffett may also be subject to a halo effect bias in which Mr. Sokol’s business values and success in other areas are falsely believed to extend into his personal values.  In each of these situations, a CEO is probably not aware of how their experience is blinding them, or leading them to selectively perceive certain information as more important than other information.

 The truth is that at this point we really do not know what really happened with these Lubrizol shares.  A federal investigation and lawsuits from shareholders will sort out the facts.  The simple point is this – sometimes we see what we expect to see, or what we want to see, at times projecting our own values onto those we trust.  Warren Buffett has made a career out of poring over data but ultimately trusting his instincts.  It may be that the shroud of his experience – clouded by key cognitive biases – has finally led him astray.

CEO pay is a very complex issue that involves a lot of tradeoffs. Ford‘s Alan Mulally represents a particularly interesting situation – he is among the absolute best executives in the world right now. In the last few years his work at Ford has been truly remarkable by nearly any metric. Further, he took an incredibly difficult job (Ford was behind when he took over and was falling fast), and he was soon faced with the most turbulent competitive landscape the automotive industry has seen in the last 50 years. Both of his primary American competitors went bankrupt. Yet through this fire, he skillfully led Ford through tremendous changes and has the company incredibly well positioned to be exceptional for the next few years – even ranked as a more attractive stock than Apple by CNNMoney readers.

This is what makes the issue so difficult. Does this tremendously successful CEO deserve a big paycheck? Absolutely. Does he deserve a $55 million dollar paycheck? That is the real question. The head of the UAW, Bob King, made this distinction very clear, which highlights the moral center of this debate. He specifically said that he does not think “any human being in the world” deserves that much money. This raises questions that business schools, boards of directors, and society at large need to contend with – do we believe that epically-large pay packages are morally responsible? Everyone agrees that long-term oriented pay packages are ideal for CEOs, as they help to solve the agency problem inherent in large public organizations by effectively aligning the CEOs interests with the interests of shareholders. However, the academic literature has shown that long-term contingent pay can be effective even if it does not involve incredibly large absolute dollar amounts. With this in mind, Bob King may be right – enormous pay packages might not be morally right. But I can assure you that until CEO labor markets adjust to bring down these huge pay packages, the best people (Alan Mulally included) will be tempted to go to organizations where they can get the best rewards for their talent.

I think this is where Notre Dame has the opportunity, and maybe the responsibility, to be a voice at the center of the debate. Given our vision to help corporate America have the courage to Ask More of Business, we need to help influence leaders and especially boards of directors to make more responsible decisions that embrace long-term contingent pay without falling victim to the easy way out of rewarding great leaders with exorbitant packages just because they feel like everyone else is doing so. Further, market leaders like Ford could use this as a ‘teachable moment’ to show their peers that truly amazing talent can be fairly compensated with large but not excessive pay packages even in the face of epic leadership we might be able to get closer to making this a reality.

For more, also see the press release Notre Dame put together about my comments:  ND Expert.  I also had the opportunity to speak with Jack Nerad on his nationally syndicated radio show about these issues more broadly. The interview should be airing in the next few weeks:  America on the Road.

I’m always interested in the guy-behind-the-guy.  Despite our tendency to lionize the individuals who do great things in this world, often those who reach great heights are propelled in part by some interesting people who stay behind the curtains.  Sometimes these people are spouses with great support, ideas, or encouragement. Sometimes they are mentors who have seen their day come and go and later find their greatest fulfillment in pressing a new hero into service or greater heights. Sometimes the ‘man behind the curtain’ is a benefactor.

Dr. Paul Farmer is a truly great man.  Even among those who have a life’s ambition to help the poor or serve the vulnerable, Dr. Farmer sets a high bar. His work, now known as Partners in Health, embodies the essence of transformational service and is rooted in a service to some of the poorest and most vulnerable people on Earth, in rural Haiti.  Much has been written about the greatness of Paul Farmer, most notably in the incredibly well reviewed book “Mountains beyond Mountains” by Tracy Kidder. This work and others attest to the great story of how a kid from Florida who was about to start at Harvard Medical School begged, borrowed, and stole whatever he could to help a people who the rest of the world seemed to have forgotten about. He built clinics, brought resources, directed the attention of institutions (the World Health Organization and Harvard Medical School among others), and changed the way modern medicine was delivered to those he served. By learning about the people he served and the lives they lived, not just their medical problems, Dr. Farmer achieved incredible results and changed medicine.

However, to me a layer beyond the Paul Farmer story is the story of a friendship and a man behind the curtain who in no small part made it all possible. Tom White was an exceptional man in just how unexceptionally he saw the world. Yet it was his humble vision and vigorous benefaction that made the Paul Farmer story possible. He seemed to have a simple way of approaching life, focused on core values of integrity and honest work, but embodied in exceptional generosity of heart and money. He was a successful businessman in his family’s construction business (J.F. White), but saw his role in this world as much more than just to be in business. In a moving eulogy reflecting on the life of his friend and chief benefactor, Paul Farmer noted that Tom saw a world in need and responded with generosity, compassion, and service. He did not accept simple answers to tough problems, and saw the needs of the poor as urgent rather than just a long-term problem. He focused on building an ‘inclusive world’ recognizing that the basic humanity of all people is the same. He rejected the idea that the poor had made bad choices, arguing that a great deal of each person’s life is determined by the circumstances into which they are born. This, in part, motivated a profound urgency to act to bring the hope of prosperity and health to those who deserved it but had little access to it. The depth of Tom’s compassion drove him to give away nearly all of his wealth toward these goals, with the Boston Globe joking that Tom White’s bumper sticker should read: “He who gives it all away wins.”

By most accounts, Tom White seemed to shy away from individual acclaim, despite his immense generosity. He preferred to be the embodied example of the man from the Wizard of Oz, who despite controlling all of the sparkle and power of the emerald city, declared, “please pay no attention to that man behind the curtain.” 

I wonder who else is back there, behind all those curtains.

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