The last two blog posts

Those last two posts...  The point was that we need to take risks. Our culture is increasingly risk averse, and I am concerned about that. Earning an MBA, reading success books, and many other activities are no longer designed to give us a boost, but to help avoid failure.

Can success books be your model?

In the success literature, more and more we are seeing a examples of sports psychology, new age* platitudes, and biographies of people who successfully climbed corporate ladders. Some of it stretches isolated examples to mean too much. Just look at the self-help section of any Barnes & Noble. 


One thing I don't understand: a lot of the genre claims that money is not important. (Perhaps this is a revulsion against the Michael Korda philosophy of the 1980s.) Some can be summarized as: "Money doesn't matter... find your own definition of success… if you follow these principles the way that Joe Montana did, you will be rich like Warren Buffett."


A particular peeve of mine is writing that uses sports training examples and laudable incidents on the field to teach how to succeed in business. These analogies can be useful, but the connection is very, very thin. Success in business requires far different skills from those required to throw a ball well. It doesn't translate well. For example, football technology has hardly changed in a century. When it has, all competitors have simultaneous access to the same technology. In sports, the playing field is not continually changing shape, surface texture, slope, or softness. Players are not traded between teams mid-game.


"Game Rules" prohibit change. Sports stars don't need the ability to predict how the field shape will suddenly change. And even in sports, the old maxims don't apply. Everyone now works hard, so merely believing in oneself is no longer enough. To consistently win, one needs to want to win more than anyone else wants to win AND also must be extremely gifted. Similarly, in business many are doing their best, so having more heart, trying to "win one for the Gipper" is insufficient. Perhaps sports analogies can only be used for highly regulated industries such as utilities, which are not allowed to compete, but that would not be useful because sports is all about competition. 


Some of the books out there are valuable. We have profiled some of them in this blog. 


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* Example: new Age philosophies of "find your path" and "listen to your heart" seem to mean "do whatever you want." Isn't that a return to a hunter-gatherer society? Is that beneficial to society in general? Shouldn't we should be working hard to fulfill human needs, for which humans will compensate us? People won't pay for really bad poetry, so I have opted out of poet as a career option. You heart might lead you to play XBOX all day, but can a revenue model come from that? 

Goals Bite

When I left home to find my way in the world, I approached my father for advice on the night before my departure. It is probably a strange time for most people, picking up a new life stage while simultaneously letting go of another, and unsure you should be doing so. As we stood in the kitchen, both leaning against different counters, both filled with that combination of nervousness and excitement that fills the air on such occasions, he scratched his chin. 

He said, "if you are ever in the final 10 seconds, down by four points and on the fourth down, and you have possession of the ball, then THROW LONG."

On many occasions I have taken his advice. Sometimes the metaphorical ball hits the metaphorical Astroturf, and I lose. Sometime it is caught by a metaphorical receiver, and I get one dance with the prom queen that night.

Like many of you, my home is full of self-help books. I also have read more than my share of "business success" books.

Adam Smith taught, or least we interpret his teaching to be, that in a free economy we are all benefited when people work hard and innovate to make a profit. Society in general is rewarded. But here is something we often ignore: those profit seekers must take risks, and that means some will fail. The Law of Averages declares that not everyone can be The Best. But those who do succeed are amply rewarded.

This means that some pain will be involved. In societies that have had things good for a long time, perception of risk focuses on potential downside more than on potential upside. On the other side of the coin, people in countries with nowhere to go but up focus on positive potential. 

In American society, we don't want to take risks anymore. So we do two things:

1)       Lobby for regulations. Large, established companies which cannot grow their market or take more market share can only stop competitors from becoming strong. That's what burdensome regulations do. On CNN or on CSPAN, regulations might sound like lifelines for the downtrodden, like earth-graders which level the playing field. But in most cases, those proposals fundamentally un-level the field. They favor current entrenched players, especially oligopolies. (Some economists dedicate their lives to this topic, but it is outside the scope of this article.)

2)       The other thing that both established and potential players are doing more and more is to decrease risk by increasing the likelihood that a possible venture or career choice is a sure bet. We have a model in observing what securities firms do: Goldman Sachs lowers the risk created by proprietary traders by hiring risk managers, mathematics experts who can quantify risk and monitor it and shift it. If they can do it, why can't I do it for my career trades? So I try to quantify everything. I find a perfect model and turn it into a formula and replicate it. Andrew Carnegie religiously used personal goals to succeed, so that's what I'll do. Steve Jobs comes up with better ideas and motivates others to help him implement those ideas. I certainly want to be like Jack Welch, so I'll mimic him. I read their books. I try to turn his way of doing business into a formula for developing my leadership skills. 

But Steve and Jack and Andrew have qualities I don't have, and they worked in different situations. If I copy them, I will not do what they did. What Steve Jobs did has already been done. 


But if I copy him, I'm not really trying to succeed. I'm just trying to avoid failure. Mimicry is a risk-avoidance strategy. And that is an increasingly common problem, with potential cause our society to melt like the dew before a July sun. 


Starting a business might end in failure. You can't eliminate that risk. Just try something, work so hard that occasionally you want to cry yourself to sleep at night, and then see what the result will be. If you don't become a mogul, then your turn will come next.