On Tested Advertising Methods

I recently finished reading Tested Advertising Method (Fifth Edition) by John Caples, revised by Fred E. Hahn.

Below are excerpts from the book that summarize the key points presented by the authors:

1) “Caples’  Three-Step Approach To Creativity: 1) Capture the prospect’s attention. Nothing happens unless something in your mailing, or your commercial makes the prospect stop long enough to pay attention to what you say next. 2) Maintain the prospect’s interest. Keep the ad, mailing, or commercial focused on the prospect, on what he or she will get out of using your product or service. 3) Move the prospect to favorable action. Unless enough “prospects” are transformed into “customers,” your ad has failed, no matter how creative. That’s why you don’t stop with A/I/A (Attention, Interest/Action), but continue right on with testing.”

2) “Caples’ Three-Step Approach to Testing: 1) Accept nothing as true about what works best in advertising until it has been objectively – What Caples called “scientifically” – tested. 2) Build upon everything you learn from testing to create an ever-stronger system that you return to with each new project. 3) Treat every ad as an ongoing test of what has been learned before. When something new works better – or something old stops working – be ready to admit you were wrong about what you thought you “knew.” But don’t just accept it. Find out why and apply it the next time.”

3) “…There are four important qualities that a good headline may possess. They are: 1) Self-Interest 2) News 3) Curiosity 4) Quick, easy way”

4) “The most frequent reason for unsuccessful advertising is advertisers who are so full of their own accomplishments that they forger to tell us why we should buy.”

5) “Here are some of the things you should notice about the various Reader’s Digest openings: 1) They are fact-packed. 2) They are telegraphic. 3) They are specific. 4) They have few adjectives. 5) They arouse curiosity.”

6) “By its attention value it (drama) can make a small advertising appropriation do the work of a large appropriation.”

7) “Thomas E. Dewey: The advertising profession is an integral part of the life of a free nation. It has helped create markets where markets did not previously exist. It has not merely sold products which the public wanted. It has sold products which the public did not know it wanted. More important still, it has made possible the only free method for the large scale manufacture of goods on a mass basis.”

8) “Three well-known and often neglected aids to pulling power are: 1) Short paragraphs, 2) Short sentences, 3) Short words.”

9) “Advertising can never become completely accurate, however because of the human element involved – in advertising you are dealing with the minds and the emotions of human beings, and these will always be, to a certain extent, unstable and unmeasurable. That is why it is necessary to test, test, test – to test copy, media, position in publications, seasonal variation, and time of day in broadcast advertising.”

10) “Test everything. Doubt everything. Be interested in theories, but don’t spend a large sum of money on a theory without spending a little money to test it first.”

11) “Four important factors in every advertising campaign” 1) Copy – what you say in your advertisements. This includes the appeal used and the method of expressing that appeal. 2) Media – which magazines, newspapers, broadcasting facilities, or other media you select to carry your message to the public. 3) Position – what position your advertisements occupy in publications; which day of the week or what time of day you select for your broadcast messages. 4) Season – in which months of the year you run most of your advertising.”

12) “It (testing) enables you to keep your finger on the public pulse. It enables you to sense trends in advance. It enables you to separate the wheat from the chaff, the sheep from the goats, the winning ideas from the duds. It enables you to multiply the results you get from the dollars you spend in advertising.”

Regards,

Omar Halabieh

Test Advertising Methods

On Executive Thinking

I recently finished reading Executive Thinking by Leslie L. Kossoff.

Below are thirteen key lessons, in the form of excerpts form the book, that I found particularly insightful:

1) “The executive must be able to speak to his vision clearly and charismatically in order for others to know where it is that he sees the organization going and why. That clear, exciting picture is the one that must be communicated, translated, and demonstrated to the rest of the organization through the actions and words of the executive and his executive and management staff.”

2) “Executive Thinking is not conventional thinking, nor is it a conventional organizational process. It is one in which, based on the dream of the executive, everyone becomes involved as an active participant in the shared dream. It is both tangible and amorphous. It is both process and result. It is the life and breath of the organization.”

3) “The executive must realize that, because his dream is iterative and evolutionary, there will never be a time when it is finished.”

4) “Knowingly or not, executives form their organization in their own image. The importance for the executive is to realize that the organization adopts what it believes to be that image. This puts a particular onus on the executive to be aware of the image he is projecting and to understand that the members of the organization are looking to him to determine the image and actions they must project.”

5) “It is useful for the executive to think of the dynamics within the organization not as competitive or adversarial activities, but as a dance. In so doing, the previously competitive and adversarial actions become part of a larger choreography wherein each person performs his steps while always knowing that his part is a part of the larger dance. That choreography is designed and determined by the executive.”

6) “As humans we are not limited to seeing things in one particular way. We choose to see things in a way that is most familiar to us. We develop thinking processes that keep us from seeing all that there is to see. We limit ourselves by not looking for or accepting the potential that is presented to us. But, just as thinking is a skill, our thinking paths can be altered and added to.”

7) “There are five trust-building behaviors that must be demonstrated. They are respect, reciprocity, consistency, integrity and involvement. Each is equally important. Unless each behavior is manifest, the model will not work. It may have some success, but ultimately it will falter and possibly fail.”

8) “Executive Thinking makes it worthwhile for individuals to challenge their previously held beliefs. Each individual sees that her participation in the system works not only to the benefit of the organization but to her own benefit as well.”

9) “The dream must be positioned so that its intent is clear and its outcome are of benefit to everyone. In this way, it becomes more than just the dream of the executive. It becomes the dream of each and every associate throughout the organization. The paradox of empowerment is that the stronger the executive and his direction and management of the organization, the more empowered the associates can be.”

10) “One of the problems that might well be encountered is the mistaken impression that a participative organization is a tolerant organization. This is and must be patently untrue. There can be no tolerance for behaviors that are not in keeping with the goals, expectations, and commitments of the organization to its associates and to its stakeholders.”

11) “Executive Thinking is a balance between action and results. Problems occur only when and if the process is wholly biased toward one or the other. Action must occur in the form of thinking and the actions that ensue as a result of that thinking. Results occur based on thinking and actions taken.”

12) “Decisions are made using the dream as the context. Actions taken are assessed both while in progress and after the fact to determine whether all the factors were adequately considered. Analyzing and applying lessons learned becomes an operating norm for the organization, both for those decisions that worked and for those decisions that did not work as expected.”

13) “Executive Thinking, however, is the greatest legacy that the executive can leave the enterprise. Through his commitment and actions he will have taught the organization how to dream…Thinking will have become a norm.”

Regards,

Omar Halabieh

Executive Thinking

On Leading Change

I recently finished reading Leading Change – Overcoming the Ideology of Comfort and the Tyranny of Custom by James O”Toole.

The aim of this book, as summarized best by the author, is to address three related questions: “1) What are the causes of resistance to change? 2) How can leaders effectively and morally overcome that resistance? 3) Why is the dominant philosophy of leadership, based on contingency theory neither an effective nor a moral guide for people who wish to lead change?”. The book addresses these questions through two parts. The first one focuses on the leaders, particularly on values-based leadership (so-called Rushmorean leadership). The second, on the followers with a focus on why people tend to resist change, and strategies to overcome that resistance.

What I particularly enjoyed about this book are the numerous reviews of other classics within these subject areas, which helps the reader further anchor the thoughts being introduced and how they are supported and/or are different from those introduced by the author. A recommended read in the areas of leadership and change!

Below are key excerpts from the book that I found particularly insightful:

1- “In complex, democratic settings, effective leadership will entail the factors and dimensions of vision, trust, listening, authenticity, integrity, hope, and, especially, addressing the true needs of followers.”

2- “As Nelson Mandela understood, people will follow only leaders who take them where they want to go. Leaders thus beget followers, and they do so by allowing the followers to take the leader’s dream as their own. This can occur only when leaders acknowledge the legitimacy of followers’ competing beliefs and diverse values. Hence the overall conclusion from our inquiry: for leadership to be effective, it must be moral, and the sine qua non of morality is respect for people. (This is the concept of leadership we are calling Rushmorean).”

3- “In sum, Rushmorean leadership is not about voting; it is about the democratic value of inclusion. There is nothing oxymoronic, chaotic, or ineffective about leadership based on that moral principle.”

4- “What we will find is that people in organizations resist change advocated by their leaders for exactly the same reasons that the leaders of organizations resist change advocated by outsiders.”

5- “In general, the successful processes of change initiated…had the following things in common: 1) Change had top-management support. 2) Change built on the unique strengths and values of the corporation. 3) The specifics of change were not imposed from the top. 4) Change was holistic. 5) Change was planned. 6) Changes were made in the guts of the organization. 7) Change was approached from a stakeholder viewpoint. 8) Change became ongoing.”

6- “Here’s a sample of some of the most popular hypotheses: 1) Homeostasis, 2) Stare decisis. 3) Inertia. 4) Satisfaction. 5) Lack of ripeness. 6) Fear. 7) Self-interest. 8) Lack of self-confidence. 9) Future shock. 10) Futility. 11) Lack of knowledge. 12) Human nature. 13) Cynicism. 14) Perversity. 15) Individual genius versus group mediocrity. 16) Ego. 17) Short-term thinking. 18) Myopia. 19) Sleepwalking. 20) Snow blindness. 21) Collective fantasy. 22) Chauvnistic conditioning. 23) Fallacy of exception. 24) Ideology. 25) Institutionalism. 26) Natura non facit saltum. 27) The rectitude of the powerful. 28) “Change has no constituency.”. 29) Determinism. 30) Scientism. 31) Habit. 32) The despotism of custom. 33) Human mindlessness.”

7- “…The possession of the skill of overcoming resistance to change is what separates the mass of individuals with good ideas from the few leaders who are able to implement them.”

8- “Thus even though progressives may argue that change will not affect the power, prestige, and positions of the haves, the haves understand intuitively that in fact change must undermine their ideology, upset their belief system, and discomfit them greatly.”

9- “The current focus of leadership studies in business has a misplaced emphasis on helping haves (corporate leaders) overcome resistance among the have-lesses and have-nots in their organizations. As we see from the foregoing analysis…the far greater problem in overcoming resistance among the haves. In fact, it is progressives inside and outside corporations who face resistance from the people who have the most power to resist: the established leaders.”

10- “Conflict, tension, and turmoil are the order of the day – today and tomorrow. Thus, great leaders recognize that there is a never-ending struggle to balance the constant and never-abating demands of those with different objectives…Because it is not possible to ignore, nor to completely satisfy, the conflicting demands of all constituencies, leaders live in a state of perpetual tension. Poor leaders cannot tolerate this discomfiting posture, and they attempt to resolve the tension by either giving in to the demands of those who are most powerful, or by issuing a command that represents their own will. There is another way: the values-based leadership described in this book. At its core, the process of values-based leadership is the creation of moral symmetry among those competing values…Hence, the task is to lead through the process of design, composition, tension, balance, and harmony.”

11- “If one wishes to learn this particular art, the first piece that must be put into place is personal acknowledgment that no other form of leadership can be both moral and effective. Once a leader makes that difficult commitment, all the other pieces will eventually fall into place, bit by bit.”

Regards,

Omar Halabieh

On Leading Change

On Only The Paranoid Survive

I recently finished reading Only The Paranoid Survive by Andrew S. Grove.

Below are excerpts from the book that summarize the key points presented by the author:

1- “Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left. I believe that the prime responsibility of a manager is to guard constantly against other people’s attacks and to inculcate this guardian attitude in the people under his or her management.”

2- “We all need to expose ourselves to the winds of change. We need to expose ourselves to our customers, both the ones who are staying with us as well as those that we may lose by sticking to the past. We need to expose ourselves to lower-level employees, who, when encouraged, will tell us a lot that we need to know. We must invite comments even from people whose job it is to constantly evaluate us and critique us, such as journalist and members of the financial community. Turn the tables and ask them some questions: about competitors, trends in the industry and what they think we should be most concerned with. As we throw ourselves into raw action, our senses and instincts will rapidly be honed again.”

3- “A strategic inflection point is when the balance of forces shifts from the old structure, from the old ways of doing business and the old ways of competing, to the new. Before the strategic inflection point, the industry simply was more like the old. After it, it is more like the new. It is a point where the curve has subtly but profoundly changed, never to change back again.”

4- “Of all the changes in the forces of competition, the most difficult one to deal with is when one of the forces become so strong that it transforms the very essence of how business is conducted in an industry.”

5- “When an industry goes through a strategic inflection point, the practitioners of the old art may have trouble. On the other hand, the new landscape provides an opportunity for people, some of whom may not even be participants in the industry in question, to join and become part of the action.”

6- “When a strategic infection point sweeps through the industry, the more successful a participant was in the old industry structure, the more threatened it is by change and the more reluctant it is to adapt to it. Second, whereas the cost to enter a given industry in the face of well-entrenched participants can be very high, when the structure breaks, the cost to enter may become trivially small.”

7- “I suspect that the people coming in are probably no better managers or leaders than the people they are replacing. they have only one advantage…the new managers come unencumbered by such emotional involvement and therefore are capable of applying an impersonal logic to the situation.”

8- “As these questions to attempt to distinguish signal from noise: 1) Is your key competitor about to change? 2) Is your key complementor about to change? 3) Do people seem to be “losing it” around you?”

9- “I call the divergence between actions and statements strategic dissonance. It is one of the surest indications that a company is struggling with a strategic inflection point.”

10- “Ideally, the fear of a new environment sneaking up on us should keep us on our toes. Our sense of urgency should be aided by our judgement, instincts and observations that have been honed by decades spent in the business world. The fact is, because of our experience, very often we managers know that we need to do something. We even know what we should be doing. But we don’t trust our instincts or don’t act on them early enough to take advantage of the benign business bubble. We must discipline ourselves to overcome our tendency to do too little too late.”

Regards,

Omar Halabieh

Only The Paranoid Survive

On Irrational Exuberance

I recently finished reading Irrational Exuberance by Robert J. Schiller.

This book serves as an awakening call from “the present…whiff of extravagant expectation, if not irrational exuberance, in the air. People are optimistic about the stock market. There is a lack of sobriety about its downside and the consequences that would ensue as a result.” The author advances that “we need to know if the price level of the stock market today, tomorrow, or any other day is a sensible reflection of economic reality, just as we need to know as individuals what we have in our bank accounts.” That being said, the purpose of the book is to advance “a better understanding of the forces that shape the long-run outlook for the market.”

This book covers a myriad of factors ranging from technology, to cultural to psychological that aid the formation and reinforcement of speculative bubbles. It ends with a section on implication of these findings on the various members of society whether individuals, institutions or government.

Below are key excerpts that I found particularly insightful:

1- “Many of the foregoing factors (that are candidates for causing a market boom) have  a self-fulfilling aspect to them, and they are thus difficult, if not impossible, to capture in predictive scientific explanations.”

2- “There are many ultimate causes for this exuberance…and the effect of these causes can be amplified by a feedback loop, a speculative bubble, as we have seen in his chapter. As prices continue to rise, the level of exuberance is enhanced by the price rise itself…The changes in thought patterns infect the entire culture and they operate not only directly from past price increases but also from auxiliary cultural changes that the past price increases helped generate.”

3- “The role of the news media in the stock market is not, as commonly believed, simply as a convenient tool for investors who are reacting directly to the economically significant news itself…The news media are fundamental propagators of speculative price movements through their efforts to make news interesting to their audience. “

4- “Ends of new eras seem to be periods when the national focus of debate can no longer be upbeat. At such time, a public speaker may still think that it would be good business to extol a vision of a brilliant future for our nation’s economy, but it is simply not credible to do so. One could, at such times, present a case that the economy must recover, as it always has, and that the stock market is underpriced and should go up, but public speakers who make such a case cannot achieve the command of public attention they do after a major stock run-up and economic boom. There are times when an audience is receptive to optimistic statements and times when it is not.”

5- “We have explored the justification people have given, at various points in history, for changing market valuations, and we have seen evidence of the transitory nature of these cultural factors. Ultimately, however, the conclusions we draw from such evidence depend on our view of human nature and the extent of human abilities to produce consistent and independent judgements.”

6- “Two kinds of psychological anchors will be considered here: quantitative anchors, which themselves give indications for the appropriate levels of the market that some people use as indications of whether the market is over-or underpriced and whether it is a good time to buy, and moral anchors, which operate by determining the strengths of the reason that compels people to buy stocks, a reason that they must weigh against their other uses for the wealth which they already have (or could have) invested in the market.”

7- “The effects of new stories on the stock market sometimes have more to do with discovery of how we feel about the news than with any logical reaction to the news. We can make decisions then that would have been impossible before the news was known. It is partly for this reason that the breaking off of a psychological anchor can be so unpredictable: people discover things about themselves, about their own emotions and inclinations, only after price change occur. Psychological anchors for the market hook themselves on the strangest things along the muddy bottom of our consciousness.”

8- “Rationale response to public information is not the only reason that people think similarly, nor is the use of that public information always appropriate or well reasoned.”

9- “Policies that interfere with markets by shutting them down or limiting them, although under some very specific circumstances apparently useful, probably should not be high on our list of solutions to the problems caused by speculative bubbles. Speculative markets perform critical resource-allocation functions, and any interference with markets to tame bubbles interferes with these functions…Most of the thrust of our national policies to deal with speculative bubbles should take the form of facilitating more free trade, as well as greater opportunities for people to take positions in more freer markets. A good outcome can be achieved by designing better forms of social insurance and creating better financial institutions to allow the real risks to be managed more effectively. The most important thing to keep in mind as we are experiencing a speculative bubble in the stock market today is that we should not let it distract us from such important tasks.”

Regards,

Omar Halabieh

Irrational Exuberance

On Man’s Search for Meaning

I recently finished reading Man’s Search for Meaning – An Introduction Logotherapy – by Viktor E. Frankl.

This book serves as an introduction to Dr. Frank’s theory of logotherapy through his experience of three years within the Nazi concentration camps. This existential analysis theory is based on finding meaning to one’s existence and seizing responsibility for it. A gripping story and a very educative and enlightening read within the psychology genre.

Below are key excerpts from the book that I found particularly insightful:

1- “The prisoner passed from the first to the second phase: the phase of relative apathy, in which he achieved a kind of emotional death.”

2- “At such a moment it is not the physical pain which hurts the most (and this applies to adults as much as to punished children); it is the mental agony caused by the injustice, the unreasonableness of it all.”

3- “Apathy, the main symptom of the second phase, was a necessary mechanism of self-defense. Reality dimmed, and all efforts and all emotions were centered on one task: preserving one’s own life and that of the other fellow.”

4- “Then I grasped the meaning of the greatest secret that human poetry and human thought and belief have to impart: The salvation of man is through love an in love.”

5- “This intensification of inner life helped the prisoner find a refuge from the emptiness, desolation and spiritual poverty of his existence, by letting him escape into the past.”

6- “As the inner life of the prisoner tended to become more intense, he also experienced the beauty of art and nature as never before.”

7- “Humor was another of the soul’d weapons in the fight for self preservation.”

8- “Man can preserve a vestige of spiritual freedom, of independence of mind, even in such terrible conditions of psychic and physical stress.”

9- “The crowning experience of all, for the homecoming man, is the wonderful feeling that, after all he has suffered, there is nothing he need fear any more – except his God.”

10- “Logotherapy focuses rather on the future, that is to say, on the assignments and meanings to be fulfilled by the patient is his future.”

11- “What man needs is not homeostasis but what I call “neo-dynamics,” i.e., the spiritual dynamics in a polar field of tension where one pole is represented by a meaning to be fulfilled and the other pole by the man who must fulfill it.”

12- “By declaring that man is a responsible creature and must actualize the potential meaning of his life, I wish to stress that the true meaning of his life is to be found in the world rather than within man or his own psyche, as though it were a closed system.”

Regards,

Omar Halabieh

Man’s Search for Meaning

On The Overspent American

I recently finished reading The Overspent American – Upscaling, Downshifting and the New Consumer – by Juliet B. Schor.

Below are key lessons in the form of excerpts that I found particularly insightful from this book in which Juliet “analyzes the crisis of the American consumer in a culture where spending has become the ultimate social act”:

1- “While I believe all Americans are deeply affected by consumerism, this book is directed to people…whose income afford comfortable lifestyle. I focus on more affluent consumers not because I believe that inequalities of consuming power are unimportant. Far from it. They are at the heart of the problem. But I believe that achieving an equitable standard of living for all Americans will require that those of us with more comfortable material lives transform our relationship to spending. I offer this book as a step in that direction.”

2- “This book is about why: About why so many middle-class Americans feel materially dissatisfied…How even a six-figure income can seem inadequate, and why this country saves less than virtually any other nation in the world. It is about the ways in which, for America’s middle classes, “spending becomes you,” about how it flatters, enhances, and defines people in often wonderful ways, but also how it takes over their lives…IT analyzes how standards of belonging socially have changes in recent decades, and how this change has introduced American to highly intensified spending pressures. And finally, it is about a growing backlash to the consumption culture, a movement of people who are downshifting – by working less, and living their consumer lives much more deliberately.”

3- “…Even though products carry well-recognized levels of prestige, are associated with particular kinds of people, or convey widely accepted messages, we cannot automatically infer the motivations of the consumers who buy them…There are other sources of meaning (beyond social inequalities). Gender, ethnicity, personal predisposition, and many other factors help structure the meanings and motivation attached to consuming.”

4- “First, for a significant number of branded and highly advertised products, there are no quality differences discernible to consumers when the labels are removed; and second, variation in prices typically exceeds variation in quality, with the difference being in part a status premium…The extra money we spend could arguably be better used in other ways – improving our public schools, boosting retirement savings, or providing drug treatment for the millions of people the country is locking up in an effort to protect commodities others have acquired. But unless we find a way to dissociate what we buy from who we think we are, redirecting those dollars will prove difficult indeed.”

5- “Today, in a world where being middle-class is not good enough for many people and indeed that social category seems like an endangered species, securing a place means going upscale. But when everyone is doing it, upscaling can mean simply keeping up. Even when we are aiming high, there’s a strong defensive component to our comparisons. We don’t want to fall behind or lose the place we’ve carved out for ourselves.”

6- “To maintain psychological comfort, most of us must transcend the strictures of the current consumption map…The first step is to decouple spending from our sense of worth, a connection basic to all hierarchical consumption maps. The second is to find a reference group for whom a low-cost lifestyle is socially acceptable.”

7- “I outline nine principles to help individuals, and the nation, get off the consumer escalator…1) Controlling desire…2) Creating a new consumer symbolism: making exclusivity uncool…3) Controlling ourselves: voluntary restraints on competitive consumption…4) Learning to share: both as a borrower and a lender be…5) Deconstruct the Commercial system: Becoming an Educated Consumer…6) Avoid “Retail Therapy”: Spending is Addictive…7) Decommercialize the Rituals…8) Making Time: Is work-and-spend working?…9) The need for a coordinate intervention.”

8- “It can hardly be possible that the dumbing-down of America has proceeded so far that it’s either consumerism or nothing. We remain a creative, resourceful, and caring nation. There’s still time left to find our way out of the mall.”

Regards,

Omar Halabieh

The OVerspent American

On My Years With General Motors

I recently finished reading My Years With General Motors by Alfred P. Sloan.

This is a true business classic. In this book Alfred Sloan shares his years of wisdom – while heading General Motors – in a variety of areas including planning, strategy, finance, leadership, innovation and management. Alfred was a true pioneer of his time in building the discipline of management and his approach is just as applicable now as it was in the early 1900s.

Below are key lessons in the form of excerpts that I found particularly insightful from this must read classic.

1- “I feel that a proper balance can and must necessarily be established in the course of time between the activities of any particular Operation and that of all our Operations together and as I see the picture at the moment no better way or even as good a way has yet been advanced as to ask those members of each organization who have the same functional relationship to get together and decide for themselves what should be done where coordination is necessary, giving such a group the power to deal with the problem where it is felt that the power can be constructively applied. I believe that such a plan properly developed gives the necessary balance between each Operation and the Corporation itself and will result in all the advantages of co-ordinated action where such action is of benefit in a broader way without in any sense limiting the initiative of independence of action of any component part of the group.”

2- “I am not going to say that rate of return is a magic want for every occasion in business. There are times when you have to spend money just to stay in business, regardless of the visible rate of return…Nevertheless, no other financial principle with which I am acquainted serves better than rate of return as an objective aid to business judgment.”

3- “The growth in the capital employed in General Motors reflects the progress of the corporation. In an economy based on competition, we have operated as rational businessmen, a fact I have tried to demonstrate with  close description of the development of our approach to management. The result has been an efficient enterprise. It should be noted that a rising successful economy like that of the United States is not only an opportunity, it is also very demanding on those whose ambition is to excel in it. “

4- “I believe that the franchise system (dealerships), which has long prevailed in the automobile industry, is the best one for manufacturers, dealers, and consumers.”

5- “The potential rewards of the Bonus Plan to ego satisfaction generate a tremendous driving force within the Corporation…To the recipient it is also an evaluation of his personal contribution to the success of the business. It is a means of conveying to the executive a form of recognition which he prizes independently of his monetary compensation.”

6- “It has been a thesis of this book that good management rests on a reconciliation of centralization and decentralization, or “decentralization with coordinated  control.” Each of the conflicting elements brought together in this concept has its unique results in the operation of a business. From decentralization we get initiative,  responsibility,  development of personnel, decisions close to the facts, flexibility – in short, all the qualities necessary for an organization to adapt to new conditions. From coordination we get efficiencies and economies It must be apparent that c-oordinated decentralization is not an easy concept to apply.”

7- “…To meet the challenge of the market place, we must recognize changes in customer needs and desires far enough ahead to have the right products in the rights places at the right time and in the right quantity. We must balance trends in preference against the many compromises that are necessary volume. We must design, not just the cars we would like to build, but more importantly, the cars that our customers want to buy.”

8- “I also hope I have not left an impression that the organization runs itself automatically. An organization does not make decisions; its function is to provide a framework, based upon established criteria, within which decisions can be fashioned in an orderly manner. Individuals make decisions and take the responsibility for them.”

Regards,

Omar Halabieh

My Years with General Motors

On Workarounds that Work

I recently read Workarounds That Work – How to Conquer Anything That Stands in Your Way at Work – by Russell Bishop.

The author defines workaround as follows: “For our purposes, we will define it (workaround) as a method for accomplishing a task or goal when the normal process or method isn’t producing the desired results…Once a problem is fixed. the workaround is usually abandoned when subsequent releases come out addressing the bug that created the problem in the first place.” The purpose of the book is best summarized by Russell: ”In Workarounds That Work, you will learn tools, systems, practices, and processes that make important initiatives easier to accomplish. Sometimes these workarounds will require additional effort, but not because the task or desired result takes superhuman skill. The additional effort comes because in order to effect the workaround, you may have to do some extra work, or even someone else’s work, so as to get yours moving.”

The book then goes on to present seventeen workarounds ranging from vision, to communication, accountability and culture to name a few. Each workaround has three basics. The first being the intention, the second is around assuming control of what you can, and last but not least influencing the remaining elements. The questions included at the end of each workaround/chapter, guide the reader to the application of the material presented. This makes this work very pragmatic and applicable. A quick and educative read in the productivity space.

Below are key excerpts from the book, that I found particularly insightful:

1- “This is where three workaround basics become operative. The first and most important issue: what is your intention? The second critical aspect is your willingness to assume control of whatever you can that will move you forward. Once you are clear on your intention and have taken control of what you can, you then face the third element: how to influence others to go along.”

2- “If you need to get someone on your side, working with you rather than against you, start by considering what the other party is charged with doing in his or her job, and then begin imagining how that person can win with helping you.”

3- “Workarounds can vary from the rudimentary and tactical to the complex and strategic. Even at the most basic levels, it’s important to keep in mind what your intention is in coming up with the workaround. Determining what the issue is and why it matters needs to come before charting what you can do and how you make it happen.”

4- “Start any “communication” with a discussion about your individual perceptions of the intended purpose, outcome, and goal. Make certain that both of you can explain the desired outcome in terms that the other can both repeat and visualize.”

5- “Once you have asked yourself the basic starting question – “What can I do that will make a difference?” – and asked the other party if there’s anything else you can do, you can then turn the question toward what the other party could conceive of doing to make the situation even better.”

6- “Rather than treating the other person, team, or group as your enemy combatant, you will gain better purchase by following Larry Senn’s advice and assuming innocence. In all likelihood, these parties are making choices based on differences in understanding owning to causes such as different goals or differences in how they are being measured.”

7- “Rather than assume that some other group will behave the way your group behaves, you should assume that there may be differences and plan accordingly.”

8- “The real goal of decision making, what we are calling “choice” here, is not about being right; it’s about being effective. If you can choose toward a desired outcome rather than kill off all other possibilities, you may then have the freedom to learn, to course correct, and to keep making progress as new data and experience are acquired.”

9- “Remember: it’s easier to ask for forgiveness than to get permission. If you keep asking for permission and seeking buy-in, you may merely be giving people reasons to object.”

10- “Keep in mind that your primary response-ability comes down to your willingness to control what you can, seek to influence from there, and then simply respond as best as you can to everything else. People routinely lose sight of where they are headed, of what their true intentions are.”

Regards,

Omar Halabieh

Workarounds That Work

On Reinventing the Bazaar

I recently finished reading Reinventing the Bazaar – A Natural History of Markets – by John McMillan. Below are key excerpts from the book that I found particularly insightful:

1- “A definition of a market transaction, then, is an exchange that is voluntary: each party can veto it, and (subject to the rules of the marketplace) each freely agrees to the terms. A market is a forum for carrying out such exchange.”

2- “Markets are too important to be left to the ideologues. In fact, markets are the most effective means we have of improving people’s well-being. For poor countries they offer the most reliable path away from poverty. For affluent countries they are part of what is needed to sustain their living standards.”

3- “The key feature of markets of all kinds is brought home when we look at the growth of new market mechanisms. Benefiting both buyer and seller, any transaction creates value. Buying and selling is therefore a form of creation. Elementary at this point is, its importance cannot be overstated. There are gains from trade, and people are relentless in finding ways to realize them.”

4- “Two kinds of market frictions arise from the uneven supply of information. There are search costs: the time, effort, and money spent learning what is available where for how much. And there are evaluation costs, arising from the difficulties buyers have in assessing quality. A successful market has mechanisms that hold down the costs of transacting that come from the dispersion of information.”

5- “Well-designed markets have a variety of mechanisms, formal and informal, to ensure there is indeed money in being honest. marketplace confidence rests on rules and customs that give even unscrupulous people reason to keep their word…Contracting rests not only on the courts but also on informal devices based on reputation. Information must flow in reputational incentives are to work.”

6- “Some externalities can be corrected by defining and enforcing property rights. In other cases the harmful activity can be taxed. In extreme cases the only solution is to ban it.”

7- “A workable platform for markets has five elements: information flows smoothly; people can be trusted to live up to their promises; competition is fostered; property rights are protected but not overprotected; and side effects on third parties are curtailed.”

8- “Governments sometimes conspire to undermine markets. Corruption cuts into productivity because firms that fear they will be at the mercy of bribe-takers are reluctant to invest. Price-fixing also cuts into productivity by preventing the price system from doing its job of allocating resources. Constructive government actions are needed…to help the market system work as it is supposed to. But there is a risk that government intervention will be perverted in counterproductive directions.”

9- “Well-functioning markets rely on a judicious mix of formal and informal controls. While the government helps to set the rules for the market, so do that market participants. an economy cannot be designed from above. If it were possible to plan the reforms, if would have been possible to plan the economy.”

10- “Those on the far left of the political spectrum, who abhor poverty, espouse policies that would entrench it. The fervent proponents of laissez-faire, who esteem market, advocate a system that would trigger their collapse.”

11- “The market system is like democracy. It is the worst form of economy, except for all the others that have been tried from time to time. It succeeds because, precisely as in Forster’s view of democracy, it admits variety and permits criticism. We should cheer it because it solves some all-but-intractable problems, which have been tackled by none of the alternative forms of economic organization. It generates wealth. It alleviates poverty. But it has its limits. There are things it cannot do. It does not necessarily do even what it is supposed to; it works well only if it is well designed. Two cheers are enough.”

Regards,

Omar Halabieh

Reinventing the Bazaar