The problem most of us face isn’t that our goals are too audacious, but that we aren’t using our mind properly. Carnegie classified his approach into three broad principles: Creative Vision, Organized Thought, Controlled Attention
Creative Vision – the ability to spot opportunities and act upon them
Focus your mind intently on one or a few problems and your subconscious mind will reward you with solutions. It also prepares you to recognize the solution once you see it or stumble upon it. Persistence and obsession is vital
Must have a definite purpose, an obsessive mission, plans to follow, make use of the mastermind principle (learning from other greats), using the power of applied faith
The man who helps the greatest number to succeed is himself the greatest success
The road to riches is well known, but long. You cannot get something for nothing
Focus more on the services rendered than the riches you shall receive
The most important skill needed is the ability to negotiate with others with the least amount of friction so as to get the maximum of friendly cooperation. In other words, win/win human relations
Man of vision recognize that sound ideal oh best investments one can make
10 principles of creative vision
Recognizes opportunities favorable to his own advancement.
Moves with definiteness of purpose in embracing opportunities.
Plans every move he makes….
Provides himself with….the knowledge of others.
Removes limitations from his own mind.
Adopts and follows the habit of Going the Extra Mile.
Keeps his mind….attuned to the circumstances and conditions of those around him.
Moves on his own personal initiative, without being urged to do so.
Assumes full responsibility for his own deeds and depends upon the soundness of his own judgement.
Develops and uses….the faculties of imagination.
Those with creative vision make their work look effortless. They achieve what they want with the minimum amount of effort
Organized Thought – self-discipline, perseverance, definitiveness of purpose
You must make your mind and willpower the master over emotions
The mind comes to believe any idea which it is repeatedly presented, whether sound or on sound. Make sure you feed your mind with as accurate and foundational facts as possible. Habit and social heredity and mimicry play an incredibly important role. Be aware of each of their effects on your life and thinking
Remove procrastination, stimulate the subconscious mind, become self-reliant, learn from others
Controlled Attention – With Creative Vision and Organized Thought, you’re able to pinpoint your attention fiercely onto any goal you set
Controlled attention magnetized the brain with the nature of one’s dominating thoughts, aims, and purposes, thus causing one to be always in search of every necessary thing that is related to one’s dominating thoughts.
What I got out of it
“New Age” thinking but from 1908. Interesting to see how Carnegie outlines why and how he succeeded – setting ambitious goals (creative vision), setting a definiteness of purpose (organized thought), and then having the perseverance and focus to follow through (controlled attention).
This book holds that the sequence technological revolution – financial bubble – collapse – golden age – political unrest recurs about every 50 years and is based on causal mechanisms that are in the nature of capitalism. These mechanisms stem from 3 features of the system, which interact with and influence one another
The fact that technological change occurs by clusters of radical innovations forming successive and distinct revolutions that modernize the whole productive structure
The functional separation between financial and production capital, each pursuing profits by different means; and
The much greater inertia and resistance to change of the socio-institutional framework in comparison with the techno-economic sphere, which is spurred by competitive pressures
The techno-economic paradigm is both a propeller of diffusion and a delaying force – it provides a model that can eventually be followed by all but this learning must eventually be overcome
It is precisely the need for reforms and the inevitable social resistance to them that lies behind the deeper crises and longer-term cyclical behavior of the system. Each technological revolution, originally received as a bright new set of opportunities, is soon recognized as a threat to the established way of doing things in firms, institutions and society at large
Old industries rejuvenated as well
New input (iron, steel, chips) reaches mass scale economics which creates massive price drops and it can therefore spread further
All areas of society are interconnected and impact each other – technological, social, political
Big bang leads to irrational exuberance which leads to structured adjustment, then installation period (irruption and frenzy), and eventually to deployment (synergy and maturity)
How new tech goes to third world and financial / debt’s role
Financial capital plays a crucial role all along. It first supports the development of the technological revolution, it then contributes to deepen the mismatch leading to a possible crash, it later becomes a contributing agent in the deployment process once the match is achieved and, when that revolution is spent, it helps give birth to the next
Regulation is the last part that is needed as part of the cycle
Monopolies, oligopolies in phase 4 must try radical innovations to stretch lifecycle, reduce cost of peripheral activities
Installation leads to turning points which leads to deployment
The turning point has to do with the balance between individual and social interests within capitalism. It is the swing of the pendulum from the extreme individualism of Frenzy to giving greater attention to collective well-being, usually through the regulatory intervention of the state and the active participation of other forms of civil society
Related services, cultural adaptation, education, regulation all come up
Becomes ubiquitous, common sense which leads to coherence. When exhausted and tired, ripe for new paradigm
Financial vs. Production Capital
Financial capital – invest, money to make more money
Production capital – builders, scaling more profit, making capacity
Little knowledge in an area vs. a lot; foot loose vs. roots
When productional capital is in control (post bubbles) it leads to real wealth creation
Financial capital should be the facilitator, not the game itself
When the companies (engines of growth) start seeking unorthodox ways to deploy their profits, that stage is at maturity (M&A, conglomerates)
In maturity, financial capital also becomes unorthodox. Idleness leads to bad loans
Provides the funding for the next paradigm
Taking a successful behavior to its extreme causes failure
Big crashes teach big lessons, but are often short lived
Cost reductions in the core inputs/infrastructure leads to further explosion
What I got out of it
Love seeing and learning about these centuries-wide deep dives that helps stitch together patterns. The cycle from irruption to frenzy to tipping point to synergy and finally maturity plays out time and again and having the image and jargon to think about it is so useful
Good strategy almost always looks this simple and obvious and does not take a thick deck of PowerPoint slides to explain. It does not pop out of some “strategic management” tool, matrix, chart, triangle, or fill-in-the-blanks scheme. Instead, a talented leader identifies the one or two critical issues in the situation—the pivot points that can multiply the effectiveness of effort—and then focuses and concentrates action and resources on them. A strategy is like a lever that magnifies force. Some fundamental sources of power used in good strategies: leverage, proximate objectives, chain-link systems, design, focus, growth, advantage, dynamics, inertia, and entropy.
The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors. A leader’s most important responsibility is identifying the biggest challenges to forward progress and devising a coherent approach to overcoming them.
A good strategy honestly acknowledges the challenges being faced and provides an approach to overcoming them.
Strategy is about how an organization will move forward. Doing strategy is figuring out how to advance the organization’s interests.
The most basic idea of strategy is the application of strength against weakness. Or, if you prefer, strength applied to the most promising opportunity.
Having a coherent strategy—one that coordinates policies and actions. A good strategy doesn’t just draw on existing strength; it creates strength through the coherence of its design.
The creation of new strengths through subtle shifts in viewpoint. An insightful reframing of a competitive situation can create whole new patterns of advantage and weakness. The most powerful strategies arise from such game-changing insights.
Good strategy is unexpected
Good strategy requires leaders who are willing and able to say no to a wide variety of actions and interests. Strategy is at least as much about what an organization does not do as it is about what it does.
Half of what alert participants learn in a strategy exercise is to consider the competition even when no one tells you to do it in advance. Looking just at the actions of a winning firm, you see only part of the picture. Whenever an organization succeeds greatly, there is also, at the same time, either blocked or failed competition.
Copying elements of its strategy piecemeal, there will be little benefit. A competitor would have to adopt the whole design, not just a part of it.
The hidden power of Wal-Mart’s strategy came from a shift in perspective. Lacking that perspective, Kmart saw Wal-Mart like Goliath saw David—smaller and less experienced in the big leagues. The network replaced the store. A regional network of 150 stores serves a population of millions! Walton didn’t break the conventional wisdom; he broke the old definition of a store.
Having a true competitive strategy meant engaging in actions that imposed exorbitant costs on the other side.
To detect a bad strategy, look for one or more of its four major hallmarks:
Failure to face the challenge.
Mistaking goals for strategy.
Bad strategic objectives.
A hallmark of true expertise and insight is making a complex subject understandable. A hallmark of mediocrity and bad strategy is unnecessary complexity—a flurry of fluff masking an absence of substance.
A leader’s most important job is creating and constantly adjusting this strategic bridge between goals and objectives.
The second form of bad strategic objectives is one that is “blue sky.” A good strategy defines a critical challenge. What is more, it builds a bridge between that challenge and action, between desire and immediate objectives that lie within grasp.
Bad strategy is vacuous and superficial, has internal contradictions, and doesn’t define or address the problem. Bad strategy generates a feeling of dull annoyance when you have to listen to it or read it.
Strategy is scarcity’s child and to have a strategy, rather than vague aspirations, is to choose one path and eschew others. There is difficult psychological, political, and organizational work in saying “no” to whole worlds of hopes, dreams, and aspirations.
Good strategy is coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure I call the kernel. The kernel of a strategy contains three elements:
A diagnosis that defines or explains the nature of the challenge.
A guiding policy for dealing with the challenge.
A set of coherent actions that are designed to carry out the guiding policy.
John gave me a sidelong look and said, “It looks to me as if there is really only one question you are asking in each case. That question is ‘What’s going on here?’ ” John’s comment was something I had never heard said explicitly, but it was instantly and obviously correct. A great deal of strategy work is trying to figure out what is going on. Not just deciding what to do, but the more fundamental problem of comprehending the situation.
Furthermore, a good strategic diagnosis does more than explain a situation—it also defines a domain of action.
Good strategy is not just “what” you are trying to do. It is also “why” and “how” you are doing it. A good guiding policy tackles the obstacles identified in the diagnosis by creating or drawing upon sources of advantage. Indeed, the heart of the matter in strategy is usually advantage. Just as a lever uses mechanical advantage to multiply force, strategic advantage multiplies the effectiveness of resources and/or actions. The coordination of action provides the most basic source of leverage or advantage available in strategy. A strategy coordinates action to address a specific challenge.
The idea that coordination, by itself, can be a source of advantage is a very deep principle. It is often underappreciated because people tend to think of coordination in terms of continuing mutual adjustments among agents. Strategic coordination, or coherence, is not ad hoc mutual adjustment. It is coherence imposed on a system by policy and design.
Folly is the direct pursuit of happiness and beauty. —GEORGE BERNARD SHAW
One of a leader’s most powerful tools is the creation of a good proximate objective—one that is close enough at hand to be feasible. Proximate objectives not only cascade down hierarchies; they cascade in time.
IKEA teaches us that in building sustained strategic advantage, talented leaders seek to create constellations of activities that are chain-linked. This adds extra effectiveness to the strategy and makes competitive imitation difficult. What is especially fascinating is that both excellence and being stuck are reflections of chain-link logic.
When someone says “Managers are decision makers,” they are not talking about master strategists, for a master strategist is a designer.
At the core, strategy is about focus, and most complex organizations don’t focus their resources. Instead, they pursue multiple goals at once, not concentrating enough resources to achieve a breakthrough in any of them.”
Increasing value requires a strategy for progress on at least one of four different fronts: deepening advantages, broadening the extent of advantages, creating higher demand for advantaged products or services, or strengthening the isolating mechanisms that block easy replication and imitation by competitors.
Follow the story of Nvidia and you will clearly see the kernel of a good strategy at work: diagnosis, guiding policy, and coherent action. You will also glimpse almost every building block of good strategy: intelligent anticipation, a guiding policy that reduced complexity, the power of design, focus, using advantage, riding a dynamic wave of change, and the important role played by the inertia and disarray of rivals.
A new strategy is, in the language of science, a hypothesis, and its implementation is an experiment. As results appear, good leaders learn more about what does and doesn’t work and adjust their strategies accordingly.
Joe Santos’s comments imply that incumbents had difficulty understanding Starbucks because it was vertically integrated—because it roasted, branded, and served its own coffee in its own company restaurants. Starbucks did not vertically integrate to purposefully confuse the competition. It did so in order to be able to mutually adjust multiple elements of its business and to capture the information generated by each element of its business operations.
To guide your own thinking in strategy work, you must cultivate three essential skills or habits.
First, you must have a variety of tools for fighting your own myopia and for guiding your own attention.
Second, you must develop the ability to question your own judgment. If your reasoning cannot withstand a vigorous attack, your strategy cannot be expected to stand in the face of real competition.
Third, you must cultivate the habit of making and recording judgments so that you can improve.
What I got out of it
Good strategy is simple. Good strategy is unexpected. Good strategy focuses on a small handful of critical factors and helps outline a path forward – it defines a domain of action. Good strategy creates exorbitant costs and ultimately blocks the competition. Good strategy is coherent and “chain-linked”
This book is about understanding, defining, and influencing where your customers are going and who they want to become when they get there. The Ask offers a lightweight but high-impact methodology for aligning strategic, marketing, brand, and innovation leaderships around customer transformation. That transformation comes from innovatively investing in who you want your customers to become.
Innovation is an investment in human capital—in the capabilities and competencies of your customers. Your future depends on their future.
Innovation is about designing customers, not just new products, new services, and new user experiences.
Customer vision is as important as corporate vision. Your corporate vision and mission statement should respect and reflect your vision of the customer.
Align customer vision (what you want your customers to become) with user experience (what you are asking them to do).
If you can’t be your own best beta, find and design the customers who can.
Anticipate—and manage—the dark side of The Ask.
Customers don’t just adopt innovations; they alter them, adapt to them, and are changed by them. Like economic Charles Darwin’s, successful innovators strive to observe and understand how their customers evolve.
Successful innovators don’t just ask customers and clients to do something different; they ask them to become someone different. Facebook asks its users to become more open and sharing with their personal information, even if they might be less extroverted in real life. Amazon turned shoppers into information-rich consumers who could share real-time data and reviews, cross-check prices, and weigh algorithmic recommendations on their paths to online purchase. Who shops now without doing at least some digital comparisons of price and performance? Successful innovators ask users to embrace—or at least tolerate—new values, new skills, new behaviors, new vocabularies, new ideas, new expectations, and new aspirations. They transform their customers. Successful innovators reinvent their customers as well as their businesses. Their innovations make customers better and make better customers.
Google continuously improves the quality of its search by improving the capabilities of its searchers—and vice versa. As Google’s searchers grow smarter and more sophisticated, so does Google. Win/win.
What does our proposed innovation ask our searchers to become?
“The entire corporation must be viewed as a customer-creating and customer-satisfying organism. Management must think of itself not as producing products but as providing customer-creating value satisfactions . . . In short, the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it.” The innovator’s ask refines and reframes Levitt’s organizing insight. What business a company is in depends, in large part, not on existing customers but who tomorrow’s customers will—and should—be.
Who do our customers want to become? What kind of customers should we be investing to create? What kind of customers will our innovations “buy”?
Let’s update Becker’s comments in light of how innovation transforms its beneficiaries. Perhaps the innovator’s most important assets “by far” aren’t its employees. Suppose its most important asset is its customers, and how it invests in its customers, how it treats its customers, how it raises the skill level of its customers. Maybe that’s a dominant factor determining whether this business is going to succeed.
Innovation should be an investment narrative explaining how customers become more valuable.
Google brilliantly reinforced its “innovator’s ask.” Its innovations asked customers to become people who expected immediacy. Google’s UX economics made search faster and easier. Users could literally do more in less time. Speed enabled and accelerated how Google transformed customer expectations. A Pavlovian would say Google conditioned its searchers to immediate gratification.
Conventional management wisdom has evolved from thinking about innovation as designing for customers, to innovation as designing with customers. The Ask takes the next essential leap: thinking about innovation as designing customers. Innovation should be treated as a medium and method for (re)designing customers.
Training people to use shopping carts not only transformed how shoppers shopped, but increased how much shoppers bought.
Visionary organizations that value innovation should have simple customer vision statements. They need to imagine—and articulate—who and what their customers should become.
What customer values, expectations, perceptions, or behaviors does your vision transform? How do your innovations enable your customers—or key customer segments—to achieve this? Your innovations are investments in realizing the customer vision.
Apple trained its customers to become design connoisseurs.
Microsoft’s innovation asked for real commitments of time, thought, and effort. What did Windows innovation upgrades and updates ask customers to become? Experts. Microsoft’s complex—and complicated—flow of feature and functionality innovation asked customers to become students of Windows. Was this a stupid ask? Absolutely not. It created commitment.
For Apple’s and Pixar’s innovators, the value of self-awareness trumped any need for customer focus. By designing for themselves, they transformed their most demanding customers.
The “being one’s own best innovator/customer” paradigm enjoys a fantastic business history. Henry Ford, George Eastman, and Edwin Land were all DIFY—do it for yourself—entrepreneurs.
All innovations come with risk. But the dark side of The Ask is not about the innovation’s riskiness but the customer weaknesses and vulnerabilities that innovation might expose. To argue that these innovations represent inherently bad investments overstates the case. But the inherent nature of these asks means these investments can lead to bad outcomes for both customer and innovator.
The Ask shouldn’t be monolithic; it’s an invitation to segmentation. Customers and clients aren’t created equal.
What I got out of it
Fascinating way to think about innovation and asking the simple question of “who you want your customer to become” can be insanely clarifying and focusing.
Kahney does a deep dive on perhaps the world’s most famous industrial designer, Jony Ive, and what makes him tick
Jony is all about the work, the team. Starting with the basics, going back to first principles, remove anything non essential
His talent came through from an early age. His father encouraged him and was a great builder himself. His Xmas present to Jony was free reign of his workshop and they’d build anything together, butt Jony had to hand draw the design
Jony’s talent was not only in the design, but in the ability to communicate the design to non-designers. He learned and worked with a wide variety of people and disciplines from an early age. It is really rare to have the combination of design aesthetic and the ability to actually build it
He was ego-free, humble and that combo with an immense talent is quite rare. No strong ideological ties was one of his mantras
One of his early designs was a pen. While it was beautiful, what set it apart was that he added a clicking mechanism that didn’t actually do anything. He noticed people fiddled with their pens and wanted to fill that need
Jony loved the work, the process. He was relentless, meticulous – making hundreds of iterations to get the design right. Not only that, he had to physically make it to truly understand if each subtle change was right or not. From early on, he came to love both the hardware and the software. He was able to zoom in and zoom out
What something should be was always his starting point. He wanted to humanize technology and was able to ignore what came before him. He always adapted himself to the product, rather than the other way around. He avoided having a style or personal stamp, preferring to be a chameleon. His avoidance of style made his designs timeless and authentic
Jony bought biology books to learn from nature. He loved the flow of water and natural movement
Often began by asking “what is the story of this product?”
Jony was a quiet leader and let his work speak for him. He hated awards and lead from the back
Before Apple, Jony helped institute parallel design programs that had no timelines. This was their creative outlet where they could experiment and fail without repercussions
It’s very easy to be different. It’s very difficult to be better
Jobs and Ivy helped move Apple from an engineering-led to design-led company. They only worried about whether it was as good as it could be and if customers would love it. They didn’t worry about how much it would cost to make or if they would make money
What I got out of it
Love Jony’s focus on simplicity, minimalism, elegance, and better understanding his role as a quiet leader, someone who let his work and his passion speak for him
One truth of archaeology in particular bears directly on my thinking. Archaeologists have their specialties, and one of the curiosities of the field is that those who specialize in one aspect of antiquity tend to be blind to anything else. Archaeologists who look for pottery sherds will not see coins, and, conversely, those who look for coins will not find sherds. Same dig, but those sifting the soils see entirely different things. So it is with markets. Most people believe that markets are driven primarily by economic factors, and that psychology plays a minor role. I take the position that markets are driven by both psychological and economic factors. I owe a great debt to economists for their inability to acknowledge the degree to which psychology moves markets. (In this sense, it’s unfortunate that economics now seems to be embracing psychology. I suspect that economists will always retain the illusion that numbers can capture mood.) My approach to the markets has been to take a long-term perspective, a natural predilection that has on numerous occasions saved me from getting lost in the froth of daily events. I admit that there is something self-serving in this strategy as well. Long-term goals postpone days of reckoning, and if you can identify a goal that takes a lifetime to achieve, you won’t be disappointed.
Good times breed laxity, laxity breeds unreliable numbers, and ultimately, unreliable numbers bring about bad times. This simple rhythm of markets is as predictable as human avarice.
Investors are very good at recognizing the moods of the past—for example, the Roaring Twenties, the Great Depression, the Swinging Sixties—but we tend to be oblivious to the mood of the present. When do we notice that the world has changed? Sometimes change arrives with a bang. The dropping of the atomic bomb on Hiroshima instantly and permanently changed the stakes of great-power conflicts. But more often, change creeps upon us incrementally, punctuated by upheavals that, often as not, are rationalized as part of business as usual.
Those most adept at profiting from a particular market are often least likely to notice when the game is over, and probably the least psychologically prepared to profit from the successor market.
But the market has even crueler twists. It’s not sufficient that a player figure out when the game has changed. When a market shifts, it usually requires the investor to adopt a psychological stance anathema to the precepts upon which he built his earlier success.
The message is that mood or investor psychology is as important to markets as is information. It requires tremendous discipline to apply this understanding to one’s behavior.
A good idea, a long-term perspective, and the creativity to implement a strategy to profit from your insight are necessary to prosper in finance, but they are not sufficient. None of these qualities will bear fruit unless you have the discipline to stay with your strategy when the market tests your confidence, as it inevitably will.
This saga was more colorful than today’s studies of pricing anomalies in the derivatives market. Unencumbered by the received wisdom of a business education, I had to figure things out for myself. If you think things through for yourself, you may waste some time, but you also may stumble onto something that has been ignored or disregarded. Doing so has enabled me to look at the financial world with fresh eyes.
I think that one of the greatest mistakes of economics was to separate itself from other disciplines. You can’t understand economics without understanding philosophy and history.
If intelligence is the ability to integrate, creativity is the ability to integrate information from seemingly unconnected sources, and a measure of both abilities is necessary for long-term success in the markets.
My passion for ancient history and archaeology also gives me perspective.
All we can ever do is look at the past to predict the future, but life is dynamic and constantly changing, so the assumptions governing predictions are bound to be wrong.
All specialists have a time frame that they believe is important—the astrophysicist who thinks in terms of billions of years can’t put himself in the mind of the meteorologist who thinks about the future in terms of hours and days. Both will be befuddled by the archaeologist whose time scale spans less that that of the astrophysicist but more than the meteorologist.
Although Danny was clearly a master of the game, making money was not an end in itself for him. I think that is true of many successful people in finance. Apart from giving money away, they have passionate outside interests.
mistake in launching the Oppenheimer Fund was in not sufficiently appreciating how skepticism about the unfamiliar can obscure the merits of even the best ideas.
We hired Milton Pollack, a brilliant lawyer who later became a distinguished federal judge. The suit unfolded slowly, and I fell into a ritual of having dinner with Pollack once a month during which he would update me on our progress and his methods. At that time he had a daughter in elementary school; he told me that before he asked any question of a witness, he would test it on his daughter.
Some of the best opportunities involve badly managed companies, if only because the situation can improve rapidly with the imposition of good management. No matter how bad a company, there is almost always a point where it is a bargain.
the proper perspective on an investment is not what you have made so far, but rather the risk and reward ratio at any given point. The price you paid for a stock is irrelevant.
I have thought about the myriad ways in which money flows toward tax incentives and away from high taxes and have concluded that taxes play a profound role in shaping history. Give officials control of the tax code and they can change society, either deliberately through the wise use of incentives or, more commonly, inadvertently through a misunderstanding of how people react to taxes. Until
It is interesting to note that any profitable market strategy, no matter how obviously it is driven by greed, always is deemed good for society by those who reap the profits.
Napoleon’s delusion was to believe in military strategy and underestimate the role of morale; his generals failed to appreciate that Russian citizens battling for their lives on their home soil had far greater incentive to fight than did a poilu from Paris yearning for the Champs Elysées. The LTCM strategists’ delusion was to watch a market go mad and fail to appreciate the degree to which their own actions contributed to the insanity.
In August alone, the fund lost roughly 45 percent of its capital, an event that the fund’s risk analysis predicted should happen no more than once in the history of Western civilization. It shouldn’t be unduly difficult to draw a conclusion about whether LTCM was extremely unlucky, or whether its managers misunderstood the nature of the risk.
Risks don’t disappear from markets or businesses; they are merely transferred or sold.
What I got out of it
Good book about risk, reward, psychology of a successful investor
Silicon Valley has always been about the future, not the present – and never the past…As we grow further and further away from that early era, we are also losing our connection to the factors that made the Valley great. That is a dangerous thing, because we risk also losing those factors that have been the real engines of our success…In that recovered knowledge may lie the key to the future
Isolation from the east coast social hierarchy, rules, and processes and the acceptance of failure allowed Silicon Valley to experiment, fail, and flourish
It was the wild west with unbridled ambition
HP men had “an unusual sensitivity to the feelings of others.” This is what made all the difference – value pricing, finest management, created the playbook that others ran
Shockley – able to distill problems without getting confused by extraneous stuff, but was a terrible manager.
Noyce was the opposite – trusting, respect, decency, equality. Knew he needed to be liked, so he surrounded himself with tough lieutenants
Valentine organized Fairchild by markets which ripped open the ability to grow and expand for the company – 4 little independent companies inside Fairchild – each had its own sales, product marketing, engineering, and even advertising and legal departments
Intel – social engineering, paradox, giant research team, perfect triumvirate with Moore, Noyce, Grove
Shannon had pulled off something remarkable; he had linked the controllable behavior of machines with a system of logic that encompassed all science, perhaps even all human thought. The Age of Computers had begun – and hard on its heels the rise of information theory, the great organizer of the postwar world
Recessions have proven over and again that they are boon times for entrepreneurs
IBM Fellowships were used to keep top talent around (IBM’s velvet trap)
Activision – Levy listed the game designers’ names on the cartridges, he announced them on television ads. The expected happened: certain top designers actually gained a following, a steady, loyal cadre of fans who could be relied upon to buy each new offering by that “author.” What’s more, despite their vulnerability to head hunters, these ego-satiated designers remained loyal to Activision
When business is good, anything goes
Incredible retelling of Jobs/Woz/Apple
Jobs’ most important contribution to Apple: his dead-eye accuracy at understanding precisely what his generation thought of itself and then playing that tune in perfect pitch
Reformers and revolutionaries, by eschewing long established and long verified rules of conduct, often slip into behavior far worse than that which they once derided
What I got out of it
Inspiring, energizing, informative, important. Makes you want to get out and build one of these firms that influences not only its customers, but the way business is done
Types of opportunities – paradigm shift, new product / business model / me-too product
Opportunity recognition – markets that change and are receptive to change, badly understood (big and misunderstood), fast growing, incumbent players cannot move, little competition
Process of Opportunity Recognition – intuitive, analytical
Seek a mission-critical pain killer, not a vitamin
Be extremely specific in defining your customer
Great entrepreneurs tend to be generalists – breadth > depth
Founders need to understand the market, product, and execution. Need to be focused on value creation, not control
Risk Identification and Elimination – raise money to reduce key risks – market, technical, people, financial
Decision making – the implementor should be the decision maker
Flexibility – In the planning process, understanding the variables is more important than the plan. It is as important to understand the other players’ plans as it is to figure out your own plans
Focus is paramount – with limited time and resources, specialization is key – should be saying “no” to 9/10 things
Focus and speed are a startups’ key advantages
Split every problem to its smallest atomic problem
Be as useful as you can to others, have vision, form win/win alliances
Focus all your efforts to satisfy the first 20% of the market segment. the others will follow
Design partners, best references, proven success
People – overqualified so the company can grow into their skills
Processes must be scalable – at some point speed becomes a liability and the need to build systems to scale operations becomes obvious
Management needs to live 3-6 months in the future
What I got out of it
Interesting that Oliver Samwer, of Rocket Internet, started his entrepreneurial career from an academic angle. He certainly doesn’t abide by all the lessons – culture, for example – but fascinating to see the lessons he pulled out and applied (ruthlessly)
Obliquity describes the process in which complex objectives are typically best reached indirectly. Complexity typically is not easily defined and the environment is uncertain. This is why oblique practices tend to move backwards at first but end up being the fastest route
Goals are often best achieved without intending them. Happiness, profits, and more come as a byproduct, not as the sole focus
If people are predictably irrational, maybe there is something wrong with our model of rationality and not something wrong with the world
Problem solving in a CAS is best done through an iterative and adaptive approach, not a master plan that is direct
Happiness is not merely the sum aggregate of happy moments, but much more than that. It takes meaning and difficulty into account. Climbing Mt. Everest is not pleasant but it may bring long term happiness. Happiness is where you find it, not where you look for it
Oblique company motives tend to bring the greatest profit. When Boeing was focused on love of planes and solving complex technological challenges, it was far more successful than when it took the direct route of solving for shareholder value
A company whose purpose is profit cannot help but veer towards greed and poor behavior. It also conspire bad feelings amongst the public who will seek to bring it down when it can. Rather, it needs to be a commitment to and passion for the business itself
The solution to complex problems lies in affectively managing the inter-relationships between Basic actions intermediate goals and long-term vision
Practical decision making is by definition oblique. It is too complex to take a direct and simple route. It will often appear obvious and direct after the fact, but this isn’t true beforehand
The outcome of what we do depends on how we do it
Problems can never be fully understood. On top of that, we can’t come to understand what the right answers are but even what are the right questions
Those who face adversity often get credit and acclaim while those who avoid it altogether are never congratulated although they tend to end up better off
Evolution is smarter than humans and it uses adaptation and iteration. Copy nature. Don’t fight her
Experienced obliquity often beats out disciplined directness. The world is too complex, problems to varied and nuanced. We know more than we could ever tell or fully explain
The successful decision makers do not see the future perfectly, they simply are adept at matching their own and their organization’s capabilities with the context / problems / opportunities at hand
The idea of a perfect solution may be misguided. It may be so context dependent that the slightest changes alter the best path forward. Good decision is oblique because it is iterative and experimental, it constantly adapts as new information becomes available and much of this info comes from the decision making process itself. Obliquity is the best approach whenever the context changes based on a complex environment
What I got out of it
The direct approach to solving a problem would be the most efficient if we perfectly understood the problem we’re solving, the path forward and how others will react to this path. In a more realistic scenario where we have imperfect information and the solution is found through adaptation and iteration, an oblique (roundabout) approach is optimal
Luxury is about elevation, social stratification, the object must be handmade, the service rendered by a human, hedonistic more than utilitarian, timeless, have both a social and personal component, elicit dreams but not envy, be superlative and not comparative.
Luxury items share a common core made of six criteria:
A very qualitative hedonistic experience or product made to last
Offered at a price that far exceeds what their mere functional value would command
Tied to a heritage, unique know-how and culture attached to the brand
Available in purposefully restricted and controlled distribution
Offered with personalized accompanying services
Representing a social marker, making the owner or beneficiary feel special, with a sense of privilege.
A luxury product is rooted in a culture. In buying a Chinese luxury product (silk, let’s say), you are buying not just a piece of material but a little bit of China as well – a luxury product comes along with a small fragment of its native soil. This does of course mean that a luxury brand has to stay absolutely true to its roots and be produced in a place that holds some legitimacy for it: by remaining faithful to its origins, the luxury product offers an anchor point in a world of cultural drift, trivialization and deracination. A luxury brand should not yield to the temptation of relocation, which effectively means dislocation: a relocated product is a soulless product (it has lost its identity), even if it is not actually anonymous (it still bears a brand name); it no longer has any business in the world of luxury. We shall be returning to this later and in greater detail, but we need to understand one thing right away: a product whose production centre has been relocated loses its right to be called a luxury product.
A luxury brand that cannot go global finishes up disappearing; it is better to have a small nucleus of clients in every country – because there is every chance that it will grow – than a large nucleus in just one country, which could disappear overnight. That’s the law of globalization.
In addition to this key social function, luxury is an access to pleasure: it should have a very strong personal and hedonistic component, otherwise it is no longer a luxury but simple snobbery
When it comes to luxury, hedonism takes precedence over functionality.
Luxury has to be multisensory: it is not only the appearance of a Porsche that matters but also the sound of it, not only the scent of a perfume but also the beauty of the bottle it comes in. It is multisensory compression.
It immediately follows from this analysis that if one wants a luxury product or service to be a lasting financial success (which is the point of this book) it absolutely must possess the following two aspects: a social aspect (luxury as a social statement in relation to other products or services – connecting luxury, brand status); a personal aspect (luxury as an individual pleasure – cocooning luxury, customer experience).
a luxury item is both timeless and of the here and now. Put another way, a luxury item has to appear both perfectly modern to the society of the day and at the same time laden with history.
Now we come back to what we said at the outset: price, and therefore money, is not a determinant of luxury. It is quite obvious that price on its own does not make something a luxury; an ordinary car will cost more than a luxury bag, and it is a common error to believe that to turn any product into a luxury product all it takes is to raise its price, which will soon bring about financial failure – a product that is more expensive can often turn into a product that is too expensive, one that nobody wants, rather than a luxury product that people long for. For anyone looking for financial success (which is the point of this book), things are even more clear-cut: within a given range, the most expensive products are never the most profitable, and a company that makes only very expensive products does not generally have any financial success (as in the case of Rolls-Royce, for example), or is likely to find it outside of its core production (designer jewellery and haute couture, for example). Too narrow a client base would entail crippling costs; Volkswagen has publicly admitted that each Bugatti Veyron costs the company over €4 million to produce, whereas it is sold for (only!) €1 million.
Money fuels the luxury engine but is not the engine; the engine is the recreation of vertical hierarchy or social stratification. Luxury converts the raw material that is money into a culturally sophisticated product that is social stratification.
In placing ourselves in the territory of value, so dear to economists, we could say that luxury introduces a new notion of value that goes beyond the classic dialectic of use-value and exchange-value: symbolic value.
the extent to which luxury and fashion differ from each other in two fundamental respects: relationship to time (durability versus ephemerality); and relationship to self (luxury is for oneself, fashion is not).
The parallelism between religion, art and luxury is striking: all three are concerned with eternity, or at least timelessness. We call what survived through the ages art, religion promises eternal happiness after death and luxury is about timeless objects of extra quality and beauty. But the comparison extends to luxury brands behaviour per se: luxury brands start small, with few clients acting as a sect of believers. Later the brand wishes to enlarge this sect, building a real community of faithful. Structurally, like religions, most luxury brands have the following: They have a creator. They have a founding myth and legend. Storytelling will maintain mystery about them. There will be a holy land, or holy place where it all started. There will be a chest of symbols ( logos, numbers, signs, etc) whose signification is known only by those who have been initiated. Luxury brands will have icons (products endowed with a sacred history). Flagship stores for these brands will be seen as new urban cathedrals. There will be regular moments of communion (called ‘community management’). Sacrifices will be involved. The most important is price. One should recall the Latin etymology of sacrifice (‘making sacred’). It is the ability to sacrifice a high sum that seals the sacred dimension of the object. A nice jewel is only nice: once you pay a lot for it, far beyond what reason or function commands, only then does it become fascinating. The sacrifice is the right to wear the object, as one has to pay a fee to enter a club. We are also close to the initiation rituals involving a physical sacrifice or at least deprivation, as described by anthropologist Mauss (1950).
He reminds us also that it is only by spending on non-productive items that people signal their rank. Here lies the difference between luxury and premium. People buying premium or even super-premium cars like to justify every dollar by a return on investment. Premium means pay more, get more in functional benefits. Luxury is elsewhere: it signals the capacity of the buyer to transcend needs, functions, or objective benefits.
Luxury is superlative, never comparative. Comparisons must be avoided at all costs. Upper-premium brands remain comparative, whereas luxury is superlative. The price of any upper-premium car must be justifiable by its utility curve.
Two observations need to be made at this point. First, the history need not necessarily be a long one: new genuine luxury brands will be born tomorrow. Second, history alone is not enough: it is necessary to create a myth, a legendary discourse that gives birth to the dream. This is what distinguishes luxury from the brand, even from the upper-premium brand.
In this chapter we shall be putting forward 24 management principles, which we call anti-laws of marketing peculiar to luxury, as they are at the opposite extreme of what marketing doctrine normally preaches – and rightly so – concerning products and brands, even premium ones.
Forget about ‘positioning’, luxury is not comparative
When it comes to luxury, being unique is what counts, not any comparison with a competitor. Luxury is the expression of a taste, of a creative identity, of the intrinsic passion of a creator; luxury makes the bald statement ‘this is what I am’, not ‘that depends’ – which is what positioning implies.
Does your product have enough flaws? Their ‘flaw’ is a source of emotion. In the world of luxury, the models and the products must have character or personality.
Do not pander to your customers’ wishes
There are two ways to go bankrupt: not listening to the client, but also listening to the client too much.
Keep non-enthusiasts out
When it comes to luxury, trying to make a brand more relevant is to dilute its value, because not only does the brand lose some of its unique features, but also its wider availability erodes the dream potential among the elite, among leaders of opinion.
Do not respond to rising demand
‘When a product sells too much we stop producing it,’ says Hermès CEO.
a luxury brand must have far more people who know it and dream of it than people who buy it.
Dominate the client
The luxury brand should be ready to play this role of adviser, educator and sociological guide. On this account it simply has to dominate.
Make it difficult for clients to buy
People do eventually get to enjoy the luxury after passing through a series of obstacles – financial obstacles, needless to say, but more particularly cultural (they have to know how to appreciate the product, wear it, consume it), logistical (find the shops) and time obstacles (wait two years for a Ferrari or a Mikimoto pearl necklace).
To create this obstacle to immediate consumption, it should always be necessary to wait for a luxury product – time is a key dimension of luxury,
Protect clients from non-clients, the big from the small
In practice that means that the brand must be segregationist and forget all society’s democratic principles. In stores, for example, it is necessary subtly to introduce a measure of social segregation: ground floor for some, first floor for others.
The role of advertising is not to sell
Advertising feeds on a sustained myth, mystery, magic, racing, highly people-centred but private shows, product placement, and art – as we saw above, an extremely important element for any luxury brand.
Communicate to those you are not targeting
Luxury has two value facets – luxury for oneself and luxury for others. To sustain the latter facet it is essential that there should be many more people who are familiar with the brand than those who could possibly afford to buy it for themselves.
The presumed price should always seem higher than the actual price
Luxury sets the price, price does not set luxury
Raise your prices as time goes on in order to increase demand
Keep raising the average price of the product range
Do not sell
You tell customers the story of the product, the facts, but you do not pressure them into making a purchase there and then.
Keep stars out of your advertising. If celebrities are used to promote the luxury product, the status of the latter is reduced to that of a mere accessory.
However, it is legitimate for a luxury brand to test new products with a selection of existing good customers of the brand, and especially on the shop floor, where a real face-to-face discussion is possible. Not only is the opinion of these brand-lovers good to collect, as they share the dream of the brand, but also it helps them to feel more ‘part of the club’, enhancing their brand loyalty.
Do not look for consensus
Do not look after group synergies
Do not look for cost reduction
Just sell marginally on the internet
This marker conserves in its genes this first function: maintaining rank, and the visibility of rank. This is why it must be highly visible: like a social seal.
It is noticeable that the brands themselves diminish the size and visibility of their logos for their products in the more expensive price ranges. It is obvious for the accessories
The internet is a fabulous place to sell fashion or premium products, but a very dangerous one to sell luxury ones.
Today you can reach the masses, but you have to do it through communities.
In order for a luxury product to succeed, it is important to master three concepts: the separation of the dream aspect from the functional aspect, the holistic understanding of the competitive universe, and management of the time relationship.
The conclusion is that initially it is necessary to expend all your energies and resources on fine-tuning the product and conquering a first core group of clients who will be the brand’s advocates. Once critical mass has been attained, it is then better to stabilize the offer and no longer invest heavily in the product, but reorientate your financial investments towards distribution and communication.
The luxury product is not a perfect product, but a sacred product
Extraordinary customer care needs extending to boundaries beyond the company’s natural expertise, to an individual and customized approach, and finally surprise and delight.
More than empathy, anticipation of desires is also required.
the true role of the salesperson is not to sell the product – it is to sell the price.
The sales personnel should never earn direct sales commission
The second challenge linked to globalization can be summarized by the statement: one brand, one world.
An own brand store makes it possible, in particular, to know exactly and in real time which products are selling, leading to a very precise steering of the logistical chain. On this point, the system is very effective: we calculated at the time that a competitor, not having integrated its production and not selling through its own network, would have had to sell a bag at twice the price that Louis Vuitton sold it in order to make ends meet. In fact, the exceptional (sometimes criticized) margins at Louis Vuitton did not arise from excessively high prices, but from the removal of all costs and damages due to intermediaries. Louis Vuitton’s competitiveness was therefore structural.
You need to sponsor an event – since you can then control all its parameters – but not a competitor (Louis Vuitton sponsors the LV Cup, not a boat; Hermès sponsors the Grand Prix de Diane, not a horse). You must choose an event that is coherent with the universe of the brand’s core, its roots (Hermès and horses; Louis Vuitton and travel, therefore boats), and concentrate on the most prestigious events.
One last point: the luxury brand should not disperse itself across multiple events in multiple sectors but concentrate fully on a single universe, in which you can develop a very strong image by devoting all your available means to it. For instance, Royal Salute has chosen Polo only.
Premium and luxury differ in their use of these strategies: premium uses an ambassador, luxury shows testimonial users.
The black and white ball organized by Truman Capote on 28 November 1966 at the Plaza Hotel in New York remains a model of the genre. The dress code was dinner jackets and long dresses, with a mask: even the journalists and bodyguards had to wear masks. Truman Capote invited 540 friends, only the rich, powerful or famous. But he made 15,000 enemies that evening: in fact, he organized a leak of information and the New York Times published the list of invitees. All those who had not been invited therefore knew that they were not members of the club, and would do anything to be invited next time.
There are nine systematic and necessary elements of the signature of a luxury brand:
The figure of the brand’s creator, the individual who made the brand a work and not a production.
The typographical logos, generally short and very visual, such as Chanel’s double
A visual symbol that accompanies the typographical signature: Aston Martin’s wings, Mercedes’ circle.
A brand colour: Tiffany’s blue, Veuve Clicquot’s orange.
A favourite material, such as silk for Hermès or python skin and ostrich leather for Prada.
The cult of detail, to the point of obsession, which is expressed visually, for example through close-ups on the seams and the lock details at Louis Vuitton. The constant hymns to the manual work, to the excellence of the artisans who have contributed to each object, to the know-how.
A way of doing things that is typical of the brand: whether it is the ‘Chanel style’ so visible in the woman’s suit – an icon of the brand – or the quilting of the Chanel bag, or the typical driving experience at the wheel of a BMW.
The creator–manager tandem is a characteristic of luxury. In contrast, Pierre Cardin’s solitude was the cause for his decline, despite his immense talent.
There are few real synergies within a group. In fact, groups that work well, such as LVMH, are associations of companies each with its own brand, teams, CEO, and considerable freedom of management, with just a small central holding activity, limited to the management of only part of the finances and human resources, and not rigid, heavy structures managing subsidiaries dependent on an all-powerful headquarters.
This is a major characteristic of this business model: you need entry products, that is, ‘budget’ products, but you need as few of these as possible, since they are not there to ‘meet a quota’ or ‘make money’.
You need to begin local and specific (one place, one product) in order to ensure coherence and the personal link to the clients from the start, and then become regional, and finally national. We have seen that the luxury product always carries the marks of its birthplace, which forms part of the client dream. Wine is French, silk is Chinese, caviar is Russian, Rolls-Royce is British.
This step is crucial, and requires skilful steering. In particular, you should not launch ‘in all directions’, nor choose markets according to their size. You must begin with those whose clients are most receptive to the brand, and who will accept the product as it stands, without modifications, as a luxury product.
Scarcity is painful, but rarity, if well managed, can become a dream.
The essence of luxury strategy is to never sacrifice long term to short term.
What I got out of it
A really thorough book on the ins and outs of luxury. Luxury is superlative, not comparative. It has to have personal and social ramifications