bill gates

On How To Lie With Statistics

I recently finished reading How To Lie With Statistics by Darrel Huff. This book was one of seven from Bill Gates’ most recent reading list.

Below are key insights from this book:

So it is with much that you read and hear. Averages and relationships and trends and graphs are not always what they seem, There maybe more in them than meets the eye, and there may be a good deal less. The secret language of statistics, so appealing in a fact-minded culture, is employed to sensationalize, inflate, confuse, and oversimplify. Statistical methods and statistical terms are necessary in reporting the mass data of social and economic trends, business conditions, “opinion” polls, the census. But without writers who use the words with honesty and understanding and readers who know what they mean, the result can only be semantic nonsense.

The test of the random sample is this: Does every name or thing in the whole group have an equal chance to be in the sample! The purely random sample is the only land that can be examined with entire confidence by means of statistical theory, but there is one thing wrong with it. It is so difficult and expensive to obtain for many uses that sheer cost eliminates it. A more economical substitute, which is almost universally used in such fields as opinion polling and market research, is called stratified random sampling.

It is a trick commonly used, sometimes in innocence but often in guilt, by fellows wishing to influence public opinion or sell advertising space. When you are told that something is an average you still don’t know very much about it unless you can find out which of the common kinds of average it is—mean, median, or mode.

Not all semi-attached figures are products of intentional deception. Many statistics, including medical ones that are pretty important to everybody, are distorted by inconsistent reporting at the source. There are startlingly contradictory figures on such delicate matters as abortions, illegitimate births, and syphilis.

The fallacy is an ancient one that, however, has a powerful tendency to crop up in statistical material, where y one that says that if B follows A, then A has caused B.

Another thing to watch out for is a conclusion in which a correlation has been inferred to continue beyond the data with which it has been demonstrated. It is easy to show that the more it rains in an area, the taller the com grows or even the greater the crop. Rain, it seems, is a blessing. But a season of very heavy rainfall may damage or even ruin the crop. The positive correlation holds up to a point and then quickly becomes a negative one. Above so-many inches, the more it rains the less com you get.

Another fertile field for being fooled lies in the confusion between percentage and percentage points. If your profits should climb from three percent on investment one year to six percent the next, you can make it sound quite modest by calling it a rise of three percentage points. With equal validity you can describe it as a one hundred percent increase. For loose handling of this confusing pair watch particularly the public-opinion pollers.

Not all the statistical information that you may come upon can be tested with the sureness of chemical analysis or of what goes on in an assayer’s laboratory. But you can prod the stuff with five simple questions, and by finding the answers avoid learning a remarkable lot that isn’t so: 1) About the first thing to look for is bias—the laboratory with something to prove for the sake of a theory, a reputation, or a fee; the newspaper whose aim is a good story; labor or management with a wage level at stake…2) How does he know? 3) What’s missing: You won’t always be told how many cases. The absence of such a figure, particularly when the source is an interested one, is enough to throw suspicion on the whole thing. Similarly a correlation given without a measure of reliability (probable error, standard error) is not to be taken very seriously. 4) Did Somebody Change The Subject? when assaying a statistic, watch out for a switch somewhere between the raw figure and the conclusion. One thing is all too often reported as another. 5) Does It Make Sense? ‘Does it make sense?” will often cut a statistic down to size when the whole rigmarole is based on an unproved assumption. You may be familiar with the Rudolf Flesch readability formula. It purports to measure how easy a piece of prose is to read, by such simple and objective items as length of words and sentences. Like all devices for reducing the imponderable to a number and substituting arithmetic for judgment, it is an appealing idea. At least it has appealed to people who employ writers, such as newspaper publishers, even if not to many writers themselves. The assumption in the formula is that such things as word length determine readability. This, to be ornery about it, remains to be proved.

An enjoyable and very educative quick read. I highly recommend it.

On The Path Between The Seas

I first heard about The Path Between The Seas – The Creation of the Panama Canal 1870-1914 – by acclaimed historian author David McCullough, when Bill Gates recommended it on his reading list.

As the title indicates, this book is about the colossal that was the undertaking of the Panama Canal construction, between the years of 1870 to 1914:

The creation of the Panama Canal was far more than a vast, unprecedented feat of engineering. It was a profoundly important historic event and a sweeping human drama not unlike that of war. Apart from wars, it represented the largest, most costly single effort ever before mounted anywhere on earth. It held the world’s attention over a span of forty years. It affected the lives of tens of thousands of people at every level of society and of virtually every race and nationality. Great reputations were made and destroyed. For numbers of men and women it was the adventure of a lifetime. Because of it one nation, France, was rocked to its foundations. Another, Colombia, lost its most prized possession, the Isthmus of Panama. Nicaragua, on the verge of becoming a world crossroads, was left to wait for some future chance. The Republic of Panama was born. The United States was embarked on a role of global involvement. In the history of finance capitalism, in the history of medicine, it was an event of signal consequence. It marked a score of advances in engineering, government planning, labor relations. It was a response to Sedan, a response to the idea of sea power. It was both the crowning constructive effort, “The Great Enterprise,” of the Victorian Era and the first grandiose and assertive show of American power at the dawn of the new century. And yet the passage of the first ship through the canal in the summer of 1914—the first voyage through the American land mass—marked the resolution of a dream as old as the voyages of Columbus.

It all started with a letter from the Secretary of the Navy back in the 1870:

The letter, several pages in length and signed by Secretary of the Navy George M. Robeson, was addressed to Commander Thomas O. Selfridge. It was an eminently clear, altogether formal document, as expected, and had a certain majesty of tone that Commander Self ridge thought quite fitting…Navy Department Washington, January 10, 1870 Sir: Sir: You are appointed to the command of an expedition to make a survey of the Isthmus of Darien, to ascertain the point at which to cut a canal from the Atlantic to the Pacific Ocean. The steam-sloop Nipsic and the store-ship Guard will be under your Command…

President Grant was the first one to have the vision on the value of such a canal, particularly to the US:

The President of the United States at this juncture was Ulysses S. Grant and it was he, the year before, who had instructed Admiral Ammen to organize the series of expeditions-“practicaI investigations,” he called them. Grant, despite his subsequent reputation as a President of little vision or initiative, was more keenly interested in an isthmian canal than any of his predecessors had been. He was indeed the first President to address himself seriously to the subject. If there was to be a water corridor, he wanted it in the proper place—as determined by civil engineers and naval authorities-and he wanted it under American control. “To Europeans the benefits of and advantages of the proposed canal are great,” he was to write, “to Americans they are incalculable.”

The first part of the history of the canal was dominated by one man – Ferdinand de Lesseps:

Viewed in retrospect, de Lesseps’ life stands out as one of the most extraordinary of the nineteenth century, even without the Panama venture. That he of all men of his time should have been the one to make “the miracle” happen at Suez is in itself miraculous. Suddenly there he was. Known after 1869 as “The Great Engineer,” he was no such thing. He had no technical background, no experience in finance. His skills as an administrator were modest. Routine of any kind bored him quickly.

His ambitions were altruistic:

“At any time he could have sold his precious concession and realized a fortune, but this he never did; his driving ambition throughout was to build the canal, ”pour le bien de l’humanite.”

However, neither he nor the people around him listened to the contrarian opinions who had valid concerns:

It was later that same day that another of the French delegates, one who had had nothing to say thus far, came to the front of the auditorium to deliver the most extraordinary pronouncement of the entire congress. A man of genius stepped forward then and there, in fact. although no one, not even de Lesseps, perceived this. He was Baron Godin de Lepinay—Nicholas-Joseph-Adolphe Godin de Lepinay, Baron de Brusly—a small, bearded aristocrat who was a chief engineer with the Corps des Ponts et Chaussees…His solution was what Philippe Bunau-Varilla would call the “Idea of the artificial Nicaragua.” Incredibly and tragically, the delegates paid him no attention. The Americans dismissed the plan as ridiculous. Menocal could hardly bring himself to mention de Lepninay’s name in his report on the congress. Ammen referred only to the “plan,” in quotes, as an illustration of the extremes some of the French had gone to in an effort to rescue the Panama route. Had the delegates reacted differently, had they taken de Lepinay seriously, the story of the canal could have turned out quite differently.

One of the major challenges with the work at Panama and differences between it and the work at the Suez:

The point he does seem to have stressed—the great lesson to be learned from his experience—was that everything, every them, had to be brought to Panama, including the men to do the work. The Panamanians themselves would be of no use. The poor were unused to heavy manual labor and were without ambition; the upper classes regarded physical work as beneath their dignity. There would be no home-grown labor force to count on, no armies of Egyptian fellahin this time. Labor had to be figured like freight, very expensive freight. Then every pick and shovel, every tent, blanket, mattress, every cookstove and locomotive, had to be carried by ship across thousands of miles of ocean. De Lesseps could count on Panama to provide nothing but the place to dig the canal.

And to some extent that past experience seemed to hurt the French more than it benefited them:

But at Panama the French had to improvise—or rather they had to go by. Virtually everything had to be learned by trial and error, and their chief difficulty as time went on was the fearful cost of their errors. The experience at Suez was little help. Probably they would have been better off in the long run had there been no Suez Canal in their past. For despite all de Lesseps told the press and his public, Panama had only one advantage over Suez: the distance to be covered. Everything else at Panama was infinitely more difficult. Panama was an immeasurably larger and more baffling task than Suez, just as Godin de Lepinay had warned.

Tropical diseases that was affecting workers was one of the most difficult challenges that the construction team had to deal with:

The toll in human lives was growing ever more ghastly, unlike anything anyone had foreseen, except possibly Godin de Lepinay. Eighteen eighty-five was to be the worst year. Probably more people died then than at any other time during the French regime. In the years to follow, the ravages of yellow fever, malaria, typhoid fever, smallpox, pneumonia, dysentery, beriberi, food poisoning, snakebite, sunstroke, were only a shade less appalling. Ordinarily on the Isthmus, yellow fever came and went in cycles of two to three years. Now, unaccountably, it never went away and there was not a thing anyone could do. Malaria, ever present as always, remained the deadliest killer.

The difficulties drew insurmountable and brought the French operations to its knees:

It was a reporter for Le Figaro, arriving at de Lesseps’ home just ten minutes after the vote in the Chamber, who told him how the vote had gone. De Lesseps turned dreadfully pale, the man wrote afterward, and could only whisper, “It is impossible! It is shameful!” The pallor and the loss of words were but momentary, however. Instinctively the old reflexes responded. He was in motion again. issuing statements, talking of new schemes. The company was in wreckage, the government had turned its back-, the long battle was ended and he had been crushed. It was Sedan again for France, yet he refused to accept that—he was incapable of accepting that…The official end came on February 4, 1889. In accordance with a desire formally expressed by shareholders in the original company. the Tribunal Civil appointed a liquidator. The Compagnie Universelle du Canal Interoceanique was no more.

What followed is one of the largest scandals to rock the French society:

It was nearly three years later when the Panama scandal broke wide open, rocking France to its foundations. Between times, the great Universal Exposition of 1889 had been staged beneath Gustave Eiffel’s gargantuan tower, and French political life went along little changed from year to year, one ministry succeeding another, despite the flaming oratory, despite the Boulanger crisis. General Boulanger, “the strong man,” having sat out his chance to seize power, having escaped to Brussels with his adored mistress, Madame de Bonnemains, had also, soon after her death, shot himself at her graveside. Panama, to be sure, had remained a major topic. Some 800,000 French men and women had been directly affected, the savings of entire families had utterly vanished. People who could ill afford to lose anything had lost everything. Still, no panic had been touched off when the company went under. There were no demonstrations in the streets May 15, 1889, the day the liquidator ordered that the work be halted on the Isthmus. Instead, shareholders submitted their grievances by formal petition, in polite, written pleas for redress through government action. Tempers cooled; rumors of fraud and political payoffs were denied or discounted or simply grew stale. When the liquidator established a special committee to go to Panama and estimate the cost of finishing the canal, many shareholders actually took heart, convinced that the government was about to rescue them.

It was a bitter ending for the de Lesseps family as well:

With family and friends and in all the remaining years of his life, Charles refused to speak of Panama. “He would not talk about it,” recalled an adoring nephew, “never, never, never, never.” And in the view of those who knew him best, he was regarded no less than ever as the most honest and admirable of men. The Suez company had kept him on its hoard of directors even during his time in prison. “He was a very honorable man, you know, the old-fashioned sort of thing,” the nephew would say…Charles had been with his father at the end. It happened the year following Charles’s release from the hospital. Madame de Lesseps and the rest of the family were also present and death came very quietly for the old adventurer. He died at La Chesnaye, in his second-fl-floor bedroom facing south, late in the afternoon on December 7, 1894, three weeks after his eighty-ninth birthday. The body was taken up to Paris by train for burial in Pere Lachaise Cemetery. There was no grand funeral procession; there were no crowds at the graveside services, only the family, a representative of the Societe de Geographic, one very old boyhood friend, and the directors of the Suez Canal Company. The Suez company paid all the funeral expenses. In the eulogies the word “Panama” was never mentioned.

In retrospect, the root causes of failure for de Lesseps was as follows:

The root sources of his downfall had been apparent since the Paris congress of 1879: the insistence on a sea-level passage through country he knew nothing about, the total disinterest in conceptions other than his own, the refusal to heed voices of experience, the disregard for all data that either conflicted with or that appeared to vitiate his own cherished vision; but none of these would have mattered greatly had it not been for that extraordinary ability to inspire the loyalty and affection of individual human beings at every social and intellectual level. From the technical standpoint the tragedy hung on the decision to cut through at sea level, to make another Suez Canal. Such a task at Panama was simply too overwhelming, if not impossible. The strategy did not suit the battleground. The handwriting had been on the wall a good three to four years before the money was gone. With the equipment then available, even a lock canal of modest dimensions would have been an enormously difficult and costly task. But had he and his technical advisers decided to make it a lock canal even as late as 1886. at the time of his second tour of the Isthmus, there probably would have been a French canal at  Panama, death, disease, jungle, geology, costs, and de Lesseps’ advanced age all notwithstanding. The size of the locks being contemplated would have made the canal obsolete in relatively little time, but the canal would have been built. As for any possible complicity on his part in the less-than-noble practices that went on behind the scenes, there is no real mystery. He was neither innocent nor a simpleton. He was involved in bribing the press, in the Herz compact, indeed he was the one who crossed that line at the very beginning at the time of the first successful stock issue.

However, he laid a foundation and the needed infrastructure for the future work:

It can also be said, and with certainty, that nothing whatever would have been attempted or accomplished at Panama had it not been for Ferdinand de Lesseps, a point missing from the postmortems of the 1890’s, largely since the actual work itself had been either forgotten or was assumed to be utterly without value. In France, as Andre Siegfried observed, no one seemed to recall that Panama had had anything to do with the building of a canal. “In the end one almost believed that The many had hardly done anything at all in the isthmus . .” The money, declared The Times of London, was “as clean gone” as if it had been sunk in the North Atlantic. Nobody talked of the hospitals that had been built, the offices, storehouses, and dock facilities, the living quarters and machine shops; the maps, plans, surveys, and hydrographic data that had been assembled; the land that had been acquired or the Panama Railroad. And the fact that more than 50,000,000 cubic meters of earth and rock had been removed from the path of the canal, an amount equal to two-thirds of the total excavation at Suez, was virtually forgotten. All had been in vain was the prevailing, unchallenged attitude; the defeat of the old pioneer had been total.

It was then up to Roosevelt to provide his vision for the Panama canal:

Roosevelt, however, looked upon the canal quite differently than de Lesseps had, differently, in fact, than nearly everyone. It was very well for others to talk of it as the dream of Columbus, to call it a giant step in the march of civilization, or to picture as de Lesseps so often had its immeasurable value to world commerce. Roosevelt was promoting neither a commercial venture nor a universal utility. To him, first, last, and always, the canal was the vital-the indispensable—path to a global destiny for the United States of America. He had a vision of his country as the commanding power on two oceans, and these joined by a canal built, owned, operated, policed, and fortified by his country. The canal was to be the first step to American supremacy at sea.

His approach nevertheless was not without controversy:

And Roosevelt’s ultimate response to the Panama situation was to become the most disputed act of his career largely because it appeared to be an act of such violent impulse, an expression of what even many of his strongest admirers saw as an arrogant, nearly infantile insistence on having things his way and plunging ahead heedless of obstacles or consequences. To some observers there seemed something unpleasantly appropriate about the fact that his recreational passion at Sagamore Hill that summer of 1903 was the so-called point-to-point “obstacle walk,” the one rule, the only rule, being that the participant must go up and over, or through, every obstacle, never around it. He was invariably the leader on such escapades, followed by a band of excited children, perhaps a stout-hearted guest or two.

On the role of the US, in Panama’s independence:

Without the military presence of the United States—had there been no American gunboats standing off shore at Colon and Panama City— the Republic of Panama probably would not have lasted a week. Rear Admiral Henry Glass, for example, would conclude after a careful appraisal of the republic’s capacity to defend itself that at the very most six hundred men might have been furnished with adequate arms. Taft, on his first visit to Panama a year later, would describe its army as “not much larger than the army on an opera stage.” Colombia, had it had free access from the sea, could have landed several thousand veteran troops on both sides of the Isthmus, just as the conspirators themselves had appreciated from the beginning. As it was, a Colombian selves had appreciated from the beginning. As it was, a Colombian through the Darien wilderness, but ravaged by fever, they gave up and turned back.

This intervention in international affairs did not come without some long-term impact:

The damage done to American relations with Colombia, indeed with all of Latin America, was enormous, just as John Tyler Morgan had prophesied. As an American minister at Bogota, James T. Du Bois, would write in 1912, the breach worsened as time passed: By refusing to allow Colombia to uphold her sovereign rights over a territory where she had held dominion for eighty years, the friendship of nearly a century disappeared, the indignation of every Colombian, and millions of other Latin-Americans, was aroused and is still most intensely active. The confidence and trust in the justice and fairness of the United States, so long manifested, has completely vanished, and the maleficent influence of this condition is permeating public opinion in all Latin-American countries, a condition which, if remedial measures are not invoked, will work inestimable harm throughout the Western Hemisphere.

The handover of the project between the French and the US was uneventful:

In the morning of May 4, 1904, and to the Panamanians, who adored ceremony and celebration, who remembered Cathedral Plaza festooned with palm branches and French flags, who remembered parades and banquets and Ferdinand de Lesseps prancing on horseback, it was a terrible disappointment and most unbecoming to the occasion. At 7:30 A.M. Lieutenant Mark Brooke met with half a dozen American officials and a duly authorized representative of the Compagnie Nouvelle at the company headquarters on the plaza, the old Grand Hotel…The transaction occupied no more than a few minutes. Scarcely anyone other than those present was aware of the event. Lieutenant Brooke had not even thought to invite President Amador. Having shaken hands with the Panamanians and the French officials, the young officer raised the Stars and Stripes to the top of the hotel flagpole.

A key for success for the US was the progress they made in combating the tropical diseases:

But while a drastic reduction of all disease was considered essential in the long run, yellow fever had to be the immediate objective. To rid the Isthmus of yellow fever, Gorgas remarked, would be to rid it of fear.

Also their approach to this engineering challenge was a paradigm shift to that of the French:

In more abstract terms, in terms of pure professional problem solving, Stevens’ greatest contribution was the basic vision of the excavation of the canal as a large-scale problem in railroad freight. As conceived by Stevens, the Panama project was simply one of moving unprecedented tonnage—dirt—by railroad with the least possible wasted motion.

Despite it having been completed after his era, Roosevelt is still credited as being the one the one behind its establishment:

None of this made much difference, however. Nor ought there ever be any question as to the legitimacy of the Roosevelt stamp on the canal. His own emphatic position was that it would never have been built but for him and it was a position no one tried to dispute. To Goethals, “The real builder of the Panama Canal was Theodore Roosevelt.” It could not have been more Roosevelt’s triumph, Goethals wrote, “if he had personally lifted every shovelful of earth in its construction.

The advancement in hydraulics through the Panama Canal were equally as impressive:

The fundamental element to be reckoned with and utilized in the locks—the vital factor in the whole plan and all its structural, mechanical, and electrical components—was water. Water would lift and lower the ships. The buoyancy of water would make the tremendous lock gates, gates two to three times heavier than any ever built before. virtually weightless. The power of falling water at the Gatun spillway would generate the electrical current to run all the motors to operate would generate the electrical current to run all the motors to operate canal, in other words, would supply its own energy needs. No force would be required to raise or lower the level of water in the locks (and thus to raise or lower a ship in transit) other than the force of gravity. The water would simply flow into the locks from above—from Gatun Lake or Miraflores Lake—or flow out into the sea-level channels. The water would be admitted or released through giant tunnels, or culverts, running lengthwise within the center and side walls of the locks, culverts eighteen feet in diameter, as large nearly as the Pennsylvania Railroad tubes under the Hudson River.

The historical accomplishment was short-lived due to the start of World War I:

There were editorials hailing the victory of the canal builders, but the great crescendo of popular interest had passed; a new heroic effort commanded world attention. The triumph at Panama suddenly belonged to another and very different era.

On a concluding and inspirational note:

Once, in a paper addressed “To the Young Engineers Who Must Carry On,” Stevens said something with which all of these remarkable men would assuredly have agreed-for all that had happened to the world since Panama. His faith in the human intellect and its creative capacities remained undaunted, Stevens wrote. The great works had still to come. “I believe that we are but children picking up pebbles on the shore of the boundless ocean. . . .”

If you are interested to see the Panama Canal in action, here is an excellent time lapse video on it.

A highly recommended read, whether your interests are in the area of history, politics, engineering, medicine or project management.

The Shipping Container Revolution

In late December 2013, Bill Gates posted a list of his Best Books of 2013, and featured The Box by Marc Levinson as one of his selections:

You might think you don’t want to read a whole book about shipping containers. And Levinson is pretty self-aware about what an unusual topic he chose. But he makes a good case that the move to containerized shipping had an enormous impact on the global economy and changed the way the world does business. And he turns it into a very readable narrative. I won’t look at a cargo ship in quite the same way again.

His recommendation intrigued me to order this book, read it and share with you.

As with any innovation, the ascent of containerization was faced with fierce opposition:

Powerful labor leaders pulled out all the stops to block its ascent, triggering strikes in dozens of harbors. Some ports spent heavily to promote it, while others spent huge sums for traditional piers and warehouses in the vain hope that the container would prove a passing fad. Governments reacted with confusion, trying to figure out how to capture its benefits without disturbing the profits, jobs, and social arrangements that were tied to the status quo. Even seemingly simple matters, such as the design of the steel fitting that allows almost any crane in any port to lift almost any container, were settled only after years of contention. In the end, it took a major war, the United States’ painful campaign in Vietnam, to prove the merit of this revolutionary approach to moving freight.

The impact of containerization was not merely one of more economic transport, it had deeper reaching impact on logistics and enabled other innovations such as just-in-time manufacturing:

Transport efficiencies, though, hardly begin to capture the economic impact of containerization. The container not only lowered freight bills, it saved time. Quicker handling and less time in storage translated to faster transit from manufacturer to customer, reducing the cost of financing inventories sitting unproductively on railway sidings or in pierside warehouses awaiting a ship. The container, combined with the computer, made it practical for companies like Toyota and Honda to develop just-in-time manufacturing, in which a supplier makes the goods its customer wants only as the customer needs them and then ships them, in containers, to arrive at a specified time. Such precision, unimaginable before the container, has led to massive reductions in manufacturers’ inventories and correspondingly huge cost savings. Retailers have applied those same lessons, using careful logistics management to squeeze out billions of dollars of costs.

Containerization also developed a strong feedback loop with global trade growth. The more efficient transport became, the more the volume of international trade rose.

Some scholars have argued that reductions in transport costs are at best marginal improvements that have had negligible effects on trade flows. This book disputes that view. In the decade after the container first came into international use, in 1966, the volume of international trade in manufactured goods grew more than twice as fast as the volume of global manufacturing production, and two and a half times as fast as global economic output. Something was accelerating the growth of trade even though the economic expansion that normally stimulates trade was weak. Something was driving a vast increase in international commerce in manufactured goods even though oil shocks were making the world economy sluggish. While attributing the vast changes in the world economy to a single cause would be foolhardy, we should not dismiss out of hand the possibility that the extremely sharp drop in freight costs played a major role in increasing the integration of the global economy.

Another consequence of containerization and perhaps the deepest reaching, is as an enabler of globalization – more specifically decoupling of economic activity from national boundaries:

The third intellectual stream feeding into this book is the connection between transportation costs and economic geography, the question of who makes what where…Globalization, the diffusion of economic activity without regard for national boundaries, is the logical end point of this process. As transport costs fall to extremely low levels, producers move from high-wage to low-wage countries, eventually causing wage levels in all countries to converge. These geographic shifts can occur quickly and suddenly, leaving long-standing industrial infrastructure underutilized or abandoned as economic activity moves on.

Marc recounts the history of the shipping container, first, the environment at the time, was ripe for the picking:

Shippers wanted cheaper transport, less pilferage, less damage, and lower insurance rates. Shipowners wanted to build bigger vessels, but only if they could spend more time at sea, earning revenue, and less time in port. Truckers wanted to be able to deliver to and pick up from the docks without hour upon hour of waiting. Business interests in port cities were praying for almost anything that would boost traffic through their harbors. Yet despite all the demands for change, and despite much experimentation, most of the industry’s efforts to improve productivity centered on such timeworn ideas as making drafts heavier so that longshoremen would have to work harder. No one had found a better way to ease the gridlock on the docks.

As is the case with many innovations, this one was primarily driven by an outsider to the industry – Malcom McLean:

The solution came from an outsider who had no experience with ships…McLean reconsidered his plan. He had realized that carrying trailers on ships was inefficient: the wheels beneath each trailer would waste a lot of precious shipboard space. Pondering that problem, McLean came up with a still more radical idea. A government maritime-promotion program made leftover World War II tankers available to ship lines very cheaply. Pan-Atlantic would buy two and convert them to haul truck trailer bodies—trailers detached from their steel beds, axles, and wheels. Subtracting the frames and wheels would reduce the space occupied by each trailer by one-third. Even better, the trailer bodies could be stacked, whereas trailers with wheels could not be. As McLean envisioned it, a truck would pull the trailer alongside the ship, where the trailer body, filled with twenty tons of freight, would be detached from its steel chassis and fitted aboard ship. At the other end of the voyage, the trailer body would be lowered onto an empty chassis and hauled to its destination…The concept that became container shipping was Malcom McLean’s…McLean understood that reducing the cost of shipping goods required not just a metal box but an entire new way of handling freight. Every part of the system—ports, ships, cranes, storage facilities, trucks, trains, and the operations of the shippers themselves—would have to change. In that understanding, he was years ahead of almost everyone else in the transportation industry. His insights ushered in change so dramatic that even the experts at the International Container Bureau, people who had been pushing containers for decades, were astonished at what he had wrought. As one of that organization’s leaders confessed later, “we did not understand that at that time a revolution was taking place in the U.S.A”.

Then came the creative destruction – that is the innovation of the shipping container:

By the middle of the 1970s, the New York docks were mostly a memoryThe revolutionary changes in cargo handling had far more dire implications for off-dock workers in transportation and distribution. Between 1964 and 1976, the number of trucking and warehousing workers rose nationally, but the number in New York fell sharply after 1970. With fewer vessels calling at New York City, fewer trucks were needed to deliver and collect cargo at the piers. Transit warehouses were abandoned or put to far less labor-intensive uses, such as parking…The changes in transport costs induced by containerization hit manufacturing, too, eliminating not only factory-floor jobs but also related trucking and distribution work as plants moved out of New York…There can be no doubt, however, that containerization eliminated one of the key reasons for operating a factory in New York City: ease of shipment…The container was not the sole cause of the surprising and painful economic changes of the 1960s and 1970s, but it was an important cause. Container technology developed far more quickly and affected transportation industries far more significantly than even its most ardent proponents had imagined. New York was only the first established shipping center whose economy would be transformed in ways that were unimaginable before the container arrived on the scene.

Which left some tough questions to be answered, as far as how displaced workers should be treated/compensated:

Despite these discontents, the longshore unions’ tenacious resistance to automation appeared to establish the principle that long-term workers deserved to be treated humanely as businesses embraced innovations that would eliminate their jobs. That principle was ultimately accepted in very few parts of the American economy and was never codified in law. Years of bargaining by two very different union leaders made the longshore industry a rare exception, in which employers that profited from automation were forced to share the benefits with the individuals whose work was automated away.

For this innovation to be universally adopted, some conformity was required. It wasn’t until some standardization for containers was introduced, that international container shipping took off:

Yet after 1966, as truckers, ship lines, railroads, container manufacturers, and governments reached compromises on issue after issue, a fundamental change could be seen in the shipping world. The plethora of container shapes and sizes that had blocked the development of containerization in 1965 gave way to the standard sizes approved internationally. Leasing companies began to feel confident investing large sums in containers and moved into the field in a big way, soon owning more boxes than the ship lines themselves…Finally, it was becoming possible to fill a container with freight in Kansas City with a high degree of confidence that almost any trucks, trains, ports, and ships would be able to move it smoothly all the way to Kuala Lumpur. International container shipping could now become a reality.

On the domestic end, it was not until containers were transported by trucks or train that adoption took off:

Most big shippers had no pressing need to use coastal shipping services, whether containerized or not. They used ocean freight for exporting or importing—but only a handful of containers were being carried on international ships. Most freight shipments were domestic, going cross-country by truck or train. Not until container technology affected land-based transportation costs would the container revolution take firm hold.

As the industry matured, so did the associated costs of maintaining the required infrastructure, leading to higher concentrations on specific ports:

These two unrelated developments—the rise of New York, the neglect of Tampa and Mobile—revealed the economics that would affect seaports as container shipping grew. For ports, capturing container traffic was going to be expensive, requiring investments out of all proportion to what had come before. For ship lines, the days when vessels meandered along the coast, calling at every port in search of cargo, would soon be over. Every stop would mean tying up an expensive containership that could generate revenue and profit only when it was on the move. Only ports that could be relied upon for large amounts of freight were worth a visit, and all others would be served by truck or barge.

Eventually, and as with any rising industry, growth gave in to a bust, and to a new reality of depressed margins. This lead to further consolidation within the industry (note the modern parallel to the airline industry):

Demand, robust through it was, could not possibly keep up with this explosion of supply. The result was a new and painful experience for the shipping industry: a rate war. Overcapacity was an old story in ocean shipping. The flow of cargo had always been volatile, based on economic growth, changes in tariffs and trade restrictions, and political factors such as wars and embargoes…Far fewer independent companies were left, and they had no illusions about the future. Rate wars would obviously be a permanent feature of the container shipping industry, recurring every time the world economy turned down or ship lines expanded their fleets. Shippers would pay according to the distance their containers traveled, regardless of the weight or the nature of the contents, and in difficult times rates would dip so low that carriers would barely cover their operating costs. Ship lines would be under constant pressure to build bigger ships and faster cranes to reduce the cost of handling each container, because at some point overcapacity would return, and when rates collapsed the carrier with the lowest cost would have the best chance of survival.

The deregulation in the 80s both on land and sea, helped pave the way for further cost reductions for the consumer:

Deregulation changed everything. In two separate laws passed in 1980, Congress freed interstate truckers to carry almost anything almost anywhere at whatever rates they could negotiate. The ICC lost its role approving rail rates, except for a few commodities such as coal and chemicals…Perhaps no part of the freight industry was altered more than the container shipping. The ability to sign long-term contracts gave railroads an incentive to develop a business that had languished for two decades, with assurance that their investment would not go to waste….Rail rates fell so steeply that by 1987, more than one-third of the containers headed from Asia to the U.S. East Coast crossed the United States by rail to international trade had given way…The Shipping Act of 1984 rewrote the rules governing international shipping through U.S. ports. Shippers could now sign long-term contracts with ship lines. In return for guaranteeing a minimum amount of cargo, a shipper could negotiate a low rate and specific terms of service, such as the frequency of ships…Shippers’ newfound power put enormous downward pressure on freight rates.

Containerization played and continues to pay a significant role in changing companies’ strategies particularly as it relates to vertical integration and supply chain management:

As freight costs plummeted starting in the late 1970s and as the rapid exchange of cargo from one transportation carrier to another became routine, manufacturers discovered that they no longer needed to do everything themselves. They could contract with other companies for raw materials and components. locking in supplies, and then sign transportation contracts to assure that their inputs would arrive when needed. Integrated production yielded to disintegrated production. Each supplier, specializing in a narrow range of products, could take advantage of the latest technological developments in its industry and gain economies of scale in its particular product lines.

While the primary lesson from The Box is one on innovation, Marc also conveys another more subtle lesson in this book on the unpredictability of the impact the shipping container has had when it was first conceived:

How innovation really works is certainly one of the lessons of The Box, but for me there is another that looms even larger: the role of unintended consequences. Economists, myself included, are in the business of predicting events; we like to think that we can analyze what has happened and draw insight into what will occur in the days to come. Business school students take a similar approach, learning to apply quantitative analysis to historical data in order to draw conclusions about the future. In the business world, this way of looking at the world through a spreadsheet is treated as modern management thinking. It’s the bread and butter of some of the world’s most famous, and expensive, consulting firms. The story of containerization attests to the limits of this sort of rational analysis, for the developments recounted in The Box turned out not at all as expected…Absolutely no one anticipated that containerization would open the way to vast changes in where and how goods are manufactured, that it would provide a major impetus to transport deregulation, or that it would help integrate East Asia into a world economy that previously had centered on the North Atlantic.

Along the same lines, hindsight is 20/20, but at the time it was nearly impossible to predict the colossal impact the shipping container has had on modern economy:

The history of the shipping container is humbling. Careful planning and thorough analysis have their place, but they provide little guidance in the face of abrupt changes that alter an industry’s very fundamentals. Flexibility is a virtue in such a situation. Resistance can be a vice, but so can a rush to action. In this kind of situation “expect the unexpected” may be as good a motto as any…That simple metal box was what we today label a disruptive technology. Even now, more than half a century after it came into use, it continues to affect our world in unexpected ways.

On a closing note:

Perhaps the most remarkable fact about the remarkable history of the box is that time and again, even the most knowledgeable experts misjudged the course of events. The container proved to be such a dynamic force that almost nothing it touched was left unchanged, and those changes often were not as predicted.

The Box is a must read in the areas of innovation, logistics and trade. Looking back it is astounding to learn how the shipping container has and continues to have such an impact on driving our modern economy. Within the container’s history, there are numerous innovation lessons that are transferable and just as applicable in today’s setting across the various industries.

On Steve Jobs

I recently finished reading Steve Jobs by Walter Isaacson.

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

1- “I always thought of myself as a humanities person as a kid, but I liked electronics,” he said. “Then I read something that one of my heroes, Edwin Land of Polaroid, said about the importance of people who could stand at the intersection of humanities and sciences, and I decided that’s what I wanted to do.” It was as if he were suggesting themes for his biography (and in this instance, at least, the theme turned out to be valid). The creativity that can occur where both the humanities and the sciences combine in one strong personality was the topic that most interested me in my biographies of Franklin and Einstein, and I believe that it will be a key to creating innovative economies in the twenty-first century.”

2- “His wife also did not request restrictions or control, nor did she ask to see in advance what I would publish. In fact she strongly encouraged me to be honest about his failings as well as his strengths. She is one of the smartest and most grounded people I have ever met. “There are parts of his life and personality that are extremely messy. and that’s the truth,” she told me early on. “You shouldn’t whitewash it. He’s good at spin, but he also has a remarkable story, and I’d like to see that it’s all told truthfully” I leave it to the reader to assess whether I have succeeded in this mission. I’m sure there are players in this drama who will remember some of the events differently or think that I sometimes got trapped in Jobs’s distortion field.”

3- “Jobs said that his appreciation for Eichler homes instilled in him a passion for making nicely designed products for the mass market. I Jove it when you can bring really great design and simple capability to something that doesn’t cost much,” he said as he pointed out the clean elegance of the houses. “It was the original vision for Apple. That’s what we tried to do with the first Mac. That’s what we did with the iPod.””

4- “The Blue Box adventure established a template for a partnership that would soon be born. Wozniak would be the gentle wizard coming up with a neat invention that he would have been happy just to give away. and Jobs would figure out how to make it user-friendly, put it together in a package, market it, and make a few bucks.”

5- “Coming back to America was, for me, much more of a cultural shock than going to India. The people in the Indian countryside don’t use their intellect like we do, they use their intuition instead, and their intuition is far more developed than in the rest of the world. Intuition is a very powerful thing, more powerful than intellect, in my opinion. That’s had a big impact on my work.”

6- “Jobs is a complex person, he said, and being manipulative is just the darker facet of the traits that make him successful. Wozniak would never have been that way, but as he points out, he also could never have built Apple. “I would rather let it pass,” he said when I pressed the point. “It’s not something I want to judge Steve by.””

7- “Apple. It was a smart choice. The word instantly signaled friendliness and simplicity. It managed to be both slightly off-beat and as normal as a slice of pie. There was a whiff of counterculture, back-to-nature earthiness to it, yet nothing could be more American. And the two words together—Apple Computer—provided an amusing disjuncture. ”

8- “Jobs’s father had once taught him that a drive for perfection meant caring about the craftsmanship even of the parts unseen. Jobs applied that to the layout of the circuit board inside the Apple II. He rejected the initial design because the lines were not straight enough. This passion for perfection led him to indulge his instinct to control. Most hackers and hobbyists liked to customize, modify, and jack various things into their computers. To Jobs, this was a threat to a seamless end-to-end user experience.”

9- “Markkula would become a father figure to Jobs. Like Jobs’s adoptive father, he would indulge Jobs’s strong will, and like his biological father, he would end up abandoning him. “Markkula was as much a father-son relationship as Steve ever had,” said the venture capitalist Arthur Rock. He began to teach Jobs about marketing and sales. “Mike really took me under his wing,” Jobs recalled. “His values were much aligned with mine. He emphasized that you should never start a company with the goal of getting rich. Your goal should be making something you believe in and making a company that will last.””

10- “Was Jobs’s unfiltered behavior caused by a lack of emotional sensitivity? No. Almost the opposite. He was very emotionally attuned. able to read people and know their psychological strengths and vulnerabilities. He could stun an unsuspecting: victim with an emotional towel-snap, perfectly aimed. He intuitively knew when someone was faking it or truly knew something. This made him masterful at cajoling, stroking, persuading, flattering, and intimidating people.”

11- “But even though Jobs’s style could be demoralizing, it could also be oddly inspiring. It infused Apple employees with an abiding passion to create groundbreaking products and a belief that they could accomplish what seemed impossible.”

12- “The best products, he believed, were “whole widgets” that were designed end-to-end, with the software closely tailored to the hardware and vice versa. This is what would distinguish the Macintosh, which had an operating system that worked only on its own hardware, from the environment that Microsoft was creating, in which its operating system could be used on hardware made by many different companies.”

13- “Their differences in personality and character would lead them to opposite sides of what would become the fundamental divide in the digital age. Jobs was a perfectionist who craved control and indulged in the uncompromising temperament of an artist; he and Apple became the exemplars of a digital strategy that tightly integrated hardware. software, and content into a seamless package. Gates was a smart, calculating, and pragmatic analyst of business and technology; he was )pen to licensing Microsoft’s operating system and software to a variety of manufacturers.”

14- “I’ll always stay connected with Apple. I hope that throughout my life I’ll sort of have the thread of my life and the thread of Apple weave in and out of each other, like a tapestry. There may be a few years when I’m not there, but I’U always come back. If you want to live your life in a creative way, as an artist, you have to not look back too much. You have to be willing to take whatever you’ve done and whoever you were and throw them away. The more the outside world tries to reinforce an image of you, the harder it is to continue to be an artist, which is why a lot of times. artists have to say. “Bye. I have to go now. I’m going crazy and I’m getting out of here.” And they go and hibernate somewhere. Maybe later they re-emerge a little differently.”

15- “Jobs sometimes avoided the truth. Helmut Sonnenfeldt once said of Henry Kissinger, “He lies not because it’s in his interest. he lies because it’s in his nature.” It was in Jobs’s nature to mislead or be secretive when he felt it was warranted. But he also indulged in being brutally honest at times, telling the truths that most of us sugarcoat or suppress. Both the dissembling and the truth-telling were simply different aspects of his Nietzschean attitude that ordinary rules didn’t apply to him.”

16- “For all of his willfulness and insatiable desire to control things. Jobs was indecisive and reticent when he felt unsure about something. He craved perfection, and he was not always good at figuring out how to settle for something less. He did not like to wrestle with complexity or make accommodations. This was true in products, design, and furnishings for the house. It was also true when it came to personal for the house. It was also true when it came to personal commitments. If he knew for sure a course of action was right. he was unstoppable. But if he had doubts, he sometimes withdrew, preferring not to think about things that did not perfectly suit him.”

17- “Ever since he left the apple commune, Jobs had defined himself and by extension Apple, as a child of the counterculture. In ads such as “Think Different” and “1984,” he positioned the Apple brand so that it reaffirmed his own rebel streak, even after he became a billionaire, and it allowed other baby boomers and their kids to do the same. “From when I first met him as a young guy, he’s had the greatest of the impact he wants his brand to have on people,” said Clow. Very few other companies or corporate leaders—perhaps none— could have gotten away with the brilliant audacity of associating their brand with Gandhi, Einstein, Picasso, and the Dalai Lama. Jobs was able to encourage people to define themselves as anti-corporate, creative. innovative rebels simply by the computer they used. “Steve created the only lifestyle brand in the tech industry,” Larry Ellison said. “There are cars people are proud to have—Porsche, Ferrari, Prius—because what I drive says something about me. People feel the same way about an Apple product.”

18- “One of his motivating passions was to build a lasting company. At age twelve, when he got a summer job at Hewlett-Packard, he learned that a properly run company could spawn innovation far more than any single creative individual. “I discovered that the best innovation is sometimes the company, the way you organize a company,” he recalled. “The whole notion of how you build a company is fascinating. When I got the chance to come back to Apple, I realized that I would be useless without the company, and that’s why I decided to stay and rebuild it.”

19- “Why do we assume that simple is good? Because with physical products. we have to feel we can dominate them. As you bring order to complexity, you find a way to make the product defer to you. Simplicity isn’t just a -visual style. It’s not just minimalism or the absence of clutter. X involves digging through the depth of the complexity. To be truly simple, you have to go really deep. For example, to have no screws on something, you can end up having a product that is so convoluted and so complex. The better way is to go deeper with the simplicity, to understand everything about it and how it’s manufactured. You have to deeply understand the essence of a product in order to be able to get rid of the parts that are not essential.”

20- “Despite his autocratic nature—he never worshiped at the altar of consensus—Jobs worked hard to foster a culture of collaboration at Apple. Many companies pride themselves on having few meetings. Jobs had many.”

21- “”From the earliest days at Apple, I realized that we thrived when we created intellectual property. If people copied or stole our software, we’d be out of business. If it weren’t protected, there’d be no incentive for us to make new software or product designs. If protection of intellectual property begins to disappear, creative companies will disappear or never get Started. But there’s a simpler reason: It’s wrong to steal. It hurts other people. And it hurts your own character.” He knew, however, that the best way to stop piracy—in fact the only way—was to offer an alternative that was more attractive than the brain-dead services that music companies were concocting.”

22- “But Sony couldn’t. It had pioneered portable music with the Walkman, it had a great record company, and it had a long history of making beautiful consumer devices. It had all of the assets to compete with Jobs’s Strategy of integration of hardware, software, devices, and content sales. Why did it fail? Partly because it was a company, like AOL Time Warner that was organized into divisions (that word itself was ominous) with their own bottom lines; the goal of achieving synergy in such companies by prodding the divisions to work together was usually elusive. Jobs did not organize Apple into semi-autonomous divisions; he closely controlled all of his teams and pushed them to work as one cohesive and flexible company, with one profit-and-loss bottom fine. “We don’t have ‘divisions’ with their own P&L,” said Tim Cook. “We run one P&L for the company.””

23- “Despite being- a denizen of the digital world, or maybe because he knew all too well its isolating potential, Jobs was a strong believer in face-to-face meetings. “There’s a temptation in our networked age to think that ideas can be developed by email and iChat,” he said. “That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say ‘Wow,’ and soon you’re cooking up all sorts of ideas.” So he had the Pixar building- designed to promote encounters and unplanned collaborations. “If a building doesn’t encourage that, you’ll lose a lot of innovation and the magic that’s sparked by serendipity,” he said. “So we designed the building to make people get out of their offices and mingle in the central atrium with people they might not otherwise see.””

24- “Jobs insisted that Apple focus on just two or three priorities at a time. “There is no one better at turning off the noise that is going on around him,” Cook said. “That allows him to focus on a few things and say no to many things. Few people are really good at that.” In order to institutionalize the lessons that he and his team were learning. Jobs started an in-house center called Apple University. He hired Joel Podolny, who was dean of the Yale School of Management, to compile a series of case studies analyzing important decisions the company had made, including the switch to the Intel microprocessor and the decision to open the Apple Stores. Top executives spent time teaching the cases to new employees, so that the Apple style of decision making would be embedded in the culture.”

25- “”Steve has a particular way that he wants to run Apple, and it’s the same as it was twenty years ago, which is that Apple is a brilliant innovator of closed systems.” Schmidt later told me. “They don’t want people to be on their platform without permission. The benefits of a closed platform is control. But Google has a specific belief that open is the better approach, because it leads to more options and competition and consumer choice.””

26- “The nasty edge to his personality was not necessary. It hindered him more than it helped him. But it did, at times, serve a purpose. Polite and velvety leaders, who take care to avoid bruising others, are generally not as effective at forcing change. Dozens of the colleagues whom Jobs most abused ended their litany of horror stories by saying that he got them to do things they never dreamed possible. And he created a corporation crammed with A players.”

27- “The saga of Steve Jobs is the Silicon Valley creation myth writ large: launching a start-up in his parents’ garage and building it into the world’s most valuable company. He didn’t invent many things outright. but he was a master at putting together ideas, art, and technology in ways that invented the feature. He designed the Mac after appreciating the power of graphical interfaces in a way that Xerox was unable to do. and he created the iPod after grasping the joy of having a thousand in your pocket in a way that Sony, which had all the assets and heritage, never could accomplish. Some leaders push innovations by being good at the big picture. Others do so by mastering details. Jobs did both, relentlessly. As a result he launched a series of products over three decades that transformed whole industries…”

28- “Was he smart? No, not exceptionally. Instead, he was a genius. His imaginative leaps were instinctive, unexpected, and at times magical. He was, indeed, an example of what the mathematician Mark Kac called a magician genius, someone whose insights come out of the blue and require intuition more than mere mental processing power. Like a pathfinder, he could absorb information, sniff the winds, and sense what lay ahead. Steve Jobs thus became the greatest business executive of our era, the one most certain to be remembered a century from now. History will place him in the pantheon right next to Edison and Ford. More than anyone else of his time, he made products that were completely innovative, combining the power of poetry and processors. With a ferocity that could make working with him as unsettling as it was inspiring, he also built the world’s most creative company. And he was able to infuse into its DNA the design sensibilities, perfectionism, and imagination that make it likely to be, even decades from now. the company that thrives best at the intersection of artistry and technology.”

Regards,

Omar Halabieh

Steve Jobs

On Presentation Zen

I just finished reading Presentation Zen – Simple Ideas on Presentation Design and Delivery – by Garr Reynolds.

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

1- “If we desire to communicate with more clarity, integrity, beauty, and intelligence, then we must move beyond what is considered to be  “normal” to something different and far more effective. The principles I am most mindful of through every step of the presentation process are restraint, simplicity, and naturalness: Restraint in preparation. Simplicity in design. Naturalness in delivery. All of which, in the end, lead to greater clarity for us and for our audience.”

2- “Not all presentation situations are appropriate for using multimedia. For example, if you have a small audience and data-intensive materials to discuss, a handout of the materials with a give-and-take discussion is usually more appropriate. There are many situations when a whiteboard or flipcharts or a paper with detailed figures make for better support. Each case is different. The discussions in this book, however, center among those presentations when multimedia is a good fit with your unique situation.”

3- “Design. Story. Symphony. Empathy. Play. Meaning. Dan Pink’s A Whole New Mind gives us the context of the new world we’re living in and why “high touch” talents—and that includes exceptional presentation skills—are so important today. Professionals today around the globe need to understand how and why the so-called right-brain aptitudes of design, story, symphony, empathy, play. and meaning are more important than ever. The best presentations of our generation will be created by professionals—engineers as well as CEOs and “creatives”—who have strong “whole mind” aptitudes and talents. These are not the only aptitudes needed by the modern presenter, but mastering these talents along with other important abilities such as strong analytical skills will take you far as a communicator in the “conceptual age.””

4- “You can wreck a communication process with lousy logic or unsupported facts, but you can’t complete it without emotion. Logic is not enough. Communication is the transfer of emotion.”

5- “Once you realize that the preparation of a presentation is an act requiring creativity, not merely the assembling of facts and data in a linear fashion, you’ll see that preparing a presentation is a “whole-minded” activity that requires as much right-brain thinking as it does left-brain thinking. In fact, while your research and background work may have required much logical analysis, calculation, and careful evidence gathering or so-called left-brain thinking, the transformation of your content into presentation form will require that you exercise much more of your so-called right brain.”

6- “Life is about living with limitations and constraints of one type or another but constraints are not necessarily bad, in fact they are helpful, even inspiring as they challenge us to think differently and more creatively about a particular problem. While problems such as a sudden request to give a 20-minute sales pitch or a 45-minute overview of our research findings have built-in limitations—such as time, tools, and budget—we can increase our effectiveness by stepping back, thinking long and hard, and determining ways we can set our own parameters and constraints as we set out to prepare and design our next presentation with greater clarity, focus, balance, and purpose.”

7- “One of the most important things you can do in the initial stage of preparing for your presentation is to get away from your computer. A fundamental mistake people make is spending almost the entire time thinking about their talk and preparing their content while sitting in front of a computer screen. Before you design vour presentation, you need to see the big picture and Identify your core messages-or the single core message. This can be difficult unless you create a stillness of  mind for yourself, something which is hard to do while puttering around in slideware.”

8- “Questions We Should Be Asking…• How much time do I have? • What’s the venue like? • ^hat time of the day? • Who is the audience? • What’s their background? What do they expect of me (us) Why was I asked to speak? What do I want them to do? What visual medium is most appropriate for this particular situation and audience? What is the fundamental purpose of my talk? What’s the story here? • And this is the most fundamental question of all. Stripped down to its essential core: What is my absolutely central point? Or put it this way: If the audience could remember only one thing (and you’ll be lucky if they do), what do you want it to be?”

9- “Two Questions: What’s Your Point? Why Does It Matter?”

10- “If you remember that there are three components to your presentation—the slides, your notes, and the handout—then you will not feel the need to place so much information (text, data, etc.) in your slides. Instead, you can place that information in your notes (for the purpose of rehearsing or as a backup “just in case”) or in the handout.”

11- “Here’s a quick summary of the six principles from Made to Stick that you should keep in mind when crystallizing your ideas and crafting your messages for speeches, presentations, or any other form of communication.

1) Simplicity. If everything is important, then nothing is important. If everything is a priority, then nothing is a priority. You must be ruthless in your efforts to simplify—not dumb down—your message to its absolute core…

2) Unexpectedness. You can get people’s interest by violating their expectations. Surprise people. Surprise will get their interest. But to sustain their interest, you have to stimulate their curiosity. The best way to do that is to pose questions or open holes in people’s knowledge and then fill those holes…

3) Concreteness. Use natural speech and give real examples with real tilings, not abstractions. Speak of concrete images, not of vague notions. Proverbs are good, say the Heath brothers, at reducing abstract concepts to concrete, simple, but powerful (and memorable) language…

4) Credibility. If you are famous in your field, you may have built-in credibility (but even that does not go as far as it used to). Most of us, however, do not have that kind of credibility, so we reach for numbers and cold hard data to support our claims as market leaders and so on…

5) Emotions. People are emotional beings. It is not enough to take people a laundry list of talking points and information on your slides—you must make them feel something…

6) Stories. We tell stories ail day long. It’s how humans have always communicated. We tell stories with our words and even with our art and music. We express ourselves through the stories we share. We teach, we learn, and we grow through stories…”

12- “What made this CEO’s presentation so compelling and memorable was that it was, above all, authentic. His stories were from his heart and from his gut. not from a memorized script. We do not tell a story from memory alone; we do not need to memorize a story that has meaning to us. If it is real, then it is in us. Based on our I research, knowledge, and experience, we can’ tell it from our gut. Internalize your story, but do I not memorize it line by line. You can’t fake it. I you do not, no amount of hyped-up, superficial enthusiasm or conviction will ever make your time with an audience meaningful. If you do not believe it, do not know it to be true, how can you J connect and convince others with your words in story form? Your words will be just hollow words.”

13- “Below is the four-step approach I usually take…Step 1 Brainstorming. Step back, go analog, get away from the computer, tap into the right brain and brainstorm ideas. do not edit ideas much here: the aim is to just let it flow. I explore. It may be messy. That’s OK. What I’m tying to do—whether I am working alone or leading a group—is to see the issue from all sides. But to do that, you have to take a step back and see the big picture…Step 2 Grouping & identifying the core. In this step, I look to identify the one key idea that is central (and memorable) from the point of view of the audience. What is the “it” that I want them to get? I use “chunking” to group similar ideas while looking for a unifying theme. The presentation may be organized into three parts, so first I look for the central theme that will be the thread running through the presentation. There is no rule that says your presentation should have three sections or three “acts” from the world of drama. However, three is a good number to aim for because it is a manageable constraint and generally provides a memorable structure…Step 3 Storyboarding off the computer. 1 take the ideas sketched out on paper in Step 2 and lay them out with Post-it notes. The advantage of this method (compared to the Slide Sorter view in PowerPoint or the Light Table view in Keynote) is that i can easily add content by writing on an additional Post-it and sticking  it under the appropriate section without ever losing sight of the structure and flow…Step 4 storyboarding in Slide Sorter/Light Table view. If you have a clear sense of your structure, you can skip Step 3 and start building the flow of your presentation directly in slideware.”

14- “When I use the word simple (or simplicity), 1 am referring to the term as being essentially synonymous with clarity, directness, subtlety, essentialness and minimalism. Designers, such as interaction designers, for example, are constantly looking for the simplest solution to complex problems. The simple solutions are not necessarily easiest for them, but the results may end up being the “easiest” to use for the end user. The best visuals are often ones designed with an eye toward simplicity. Yet, this says nothing about the specifics of a visual presentation. That will depend on the content and context.”

15- “General Design Principles:

1) The Signal-to-Noise Ratio (SNR) is a principle borrowed from more technical fields such as radio communications and electronic communication in general, but the principle itself is applicable to design and communication problems in virtually any field. For our purposes, the SNR is the ratio of relevant to irrelevant elements or information in a slide or other display. The goal is to have the highest signal-to-noise ratio possible in your slides…

2) The picture superiority effect says that pictures are remembered better than words, especially when people are casually exposed to the information and the exposure is for a very limited time…

3) Empty space (also called negative space or white space) is a concept that is supremely simple, yet the most difficult for people to apply. Whether people are designing a document or a slide, the urge to fill empty areas with more elements is just too great. One of the biggest mistakes that typical business people make with presentation slides (and documents as well) is going out of their way to seemingly use every centimeter of space on a page, filling it up nth text, boxes, clip art, charts, footers, and the ubiquitous company logo. Empty space implies elegance and clarity. This is true with graphic design. but you can see the importance of space (both visual and physical) in the context of, say, interior design as well. High-end brand shops are always designed to create as much open space as possible. Empty space can convey a feeling of high quality, sophistication, and importance…

4) Contrast simply means difference. And for whatever reason—perhaps our brains think they are still back in the savannah scanning for wild predators—we are all wired to notice differences. We are not conscious of it, but we are scanning and looking for similarities and differences all the time. Contrast is what we notice, and it’s what gives a design its energy. So you should make elements that are not the same clearly different, not just slightly different…

5) The principle of repetition simply means the reusing of the same or similar elements throughout your design. Repetition of certain design elements in a slide or among a deck of slides will bring a clear sense of unity, consistency, and cohesiveness. Where contrast is about showing differences, repetition is about subtly using elements to make sure the design is viewed as being part of a larger whole.

6) The whole point of the alignment principle is that nothing in your slide design should look as if it were placed there randomly. Every element is connected visually via an invisible line. Where repetition is more concerned with elements cross a deck of slides, alignment is about obtaining unity among elements of a single slide.

7) The principle of proximity is about moving things closer or farther apart to achieve a more organized look. The principle says that related items should be grouped together so that they will be viewed as a group, rather than as several unrelated elements. Audiences will assume that items that are not near each other in a design are not closely related. Audiences will naturally tend to group similar items that are near to each other into a single unit.”

16) “Technical training is important, but technical training is something acquired and will always have the feel of artificiality unless one has the proper state of mind. “Unless the mind which avails itself of the technical skill somehow attunes itself to a state of the utmost fluidity or mobility,” says Suzuki, “anything acquired or superimposed lacks spontaneity of natural growth.” In this sense, I think instructors and books can help us become better at presenting well, but ultimately, like many other performance arts, it must grow within us.”

17) “These precepts offer good advice for delivering effective presentations: (1) Carefully observe oneself and one’s situation, carefully observe others, and carefully observe one’s environment. (2) Seize the initiative in whatever you undertake. (3) Consider fully, act decisively. (4) Know when to stop. (5) Keep to the middle. These are wise words indeed, but these are not “effective presentation principles” at all, they are Jigoro Kano’s Five Principles of Judo as outlined by John Stevens in Budo Secrets (Shambhala; New Ed edition).”

18) “Professional entertainers know that you want to end on a high note and leave the audience yearning for just a bit more from you. We want to leave our audiences satisfied (motivated, inspired, more knowledgeable, etc.), but not feeling that they could have done with just a little less. We can apply this spirit to the length and amount of material we put into a presentation as well. Give them high quality—the highest you can—but do not give them so much quantity that you leave them with their heads spinning and guts aching.”

19) “The first step down the road to becoming a great presenter is simply seeing—really seeing- that that which passes for normal and ordinary and good enough is off-kilter with how we learn, understand, remember, and engage. No matter what your starting point is today, you can become much better. In fact, you can become extraordinary. I know this is true because I have seen it many times before. I have worked with professionals—young and old—who believed that they were not particularly creative, charismatic, or dynamic, and yet with a little help they were able to transform themselves into extremely creative, highly articulate, engaging presenters once they realized that that person—that remarkable presenter—was in them already. Once they opened their eyes and made the commitment to learn and leave the past behind, it was just a matter of time before great progress was visible. Interestingly, as their confidence grew and they became more effective presenters, their newly found confidence and perspective had a remarkable impact on other aspects of their personal and professional lives.”

Regards,

Omar Halabieh

Presentation Zen

On The Big Switch

I recently finished reading The Big Switch – Rewiring The World, From Edison to Google by Nicholas Carr.

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

1- “What made large-scale electric utilities possible was a series of scientific and engineering breakthroughs – in electricity generation and transmission as well as in the design of electric motors – but what ensured their triumph was not technology but economics.”

2- “At a purely economic level, the similarities between electricity and information technology are even more striking. Both are what economists call general purpose technologies…they can both be delivered efficiently over a network.”

3- “If the electric dynamo was the machine that fashioned twentieth-century society – that made us who we are – the information dynamo is the machine that will fashion the new society of the twenty-first century.”

4- “What the fiber-optic Internet does for computing is exactly what the alternating current network did for electricity: it makes the location of the equipment unimportant to the user. But it does more than that. Because the internet has been designed to accommodate any type of computer and any form of digital information, it also plays the role of Insull’s rotary converter: it allows disparate and formerly incompatible machines to operate together as a single system. It creates harmony out of a cacophony. By providing a universal medium for data transmission and translation, the Net is spurring the creation of centralized computing plants that can serve thousands or millions of customers simultaneously. What companies used to have no choice but to supply themselves, they can now purchase as a service for a simple fee. And that means they can finally free themselves from their digital millwork.”

5- “It will take many years for the utility computing system to mature. Like Edison and Insull before them, the pioneers of the new industry will face difficult business and technical challenges. They’ll need to figure out the best ways to meter and set prices for different kinds of services. They’ll need to become more adept at balancing loads and managing diversity factors as demand grows. They’ll need to work with governments to establish effective regulatory regimes. They’ll need to achieve new levels of security, reliability, and efficiency. Most daunting of all they’ll need to convince big companies to give up control over their private systems and begin to dismantle the data centers into which they’ve plowed so much money. But these challenges will be met just as they were met before. The economics of computing have changed, and it’s the new economics that are now guiding progress. the PC age is giving way to a new era: the utility age.”

6- “Virtualization allows companies – or the utilities that serve them – to regain the high capacity utilization that characterized the mainframe age while gaining even more flexibility that they had during the PC age. It offers the best of both worlds.”

7- “Some of the old-line companies will succeed in making the switch to the new model of computing; others will fail. But all of them would be wise to study the examples of General Electric and Westinghouse. A hundred years ago, both these companies were making a lot of money selling electricity production components and systems to individual companies. That business disappeared as big utilities took over electricity supply. But GE and Westinghouse were able to reinvent themselves. They became leading suppliers of generators and other equipment to the new utilities, and they also operated or invested in utilities themselves. Most important of all, they built vast new businesses supplying electric appliances to consumers – businesses that only became possible after the arrival of large scale electric utilities.”

8- “When applications have no physical form, when they can be delivered as digital services over a network, the constraints disappear. Computing is also much more modular than electricity generation. Not only can applications be provided by different utilities, but even the basic building blocks of computing – data storage, data processing, data transmission – can be broken up into different services supplied from different locations by different companies. Modularity reduces the likelihood that the new utilities will form service monopolies, and it gives us, as the users of utility computing, a virtually unlimited array of options.”

9- “Not only will the Internet tend to divide people with different views, in other words, it will also tend to magnify the differences.”

10- “All technological change is generational change. The full power and consequence of a new technology are unleashed only when those who have grown up with it become adults and begin to push their outdated parents to the margins. As the older generations die, they take with them their knowledge of what was lost when the new technology arrived, and only the sense of what was gained remains. It’s in this way that progress covers its tracks, perpetually refreshing the illusion that where we are is where we were meant to be.”

Regards,

Omar Halabieh

The Big Switch

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