Tag Archives: Power

The Innovator’s Solution: Creating and Sustaining Successful Growth by Clayton Christensen

Summary

  1. The solution to the innovator’s dilemma is two-fold: first, get top-level commitment by framing an innovation as a threat during the resource allocation process; later, shift responsibility for the project to an autonomous organization that can frame it as an opportunity 

Key Takeaways

  1. Overview
    1. The structures and initial conditions that are required for successful growth are enumerated in the chapters in this book. They include starting with a cost structure in which attractive profits can be earned at low price points and which can then be carried up market; being in a disruptive position relative to competitors so that they are motivated to flee rather than fight; starting with a set of customers who had been nonconsumers so that they are pleased with modest products; targeting a job that customers are trying to get done; skating to where the money will be, not to where it was; assigning managers who have taken the right courses in the school of experience and putting them to work within processes and organizational values that are attuned to what needs to be done; having the flexibility to respond as a viable strategy emerges; and starting with capital that can be patient for growth. If you start in conditions such as these, you do not need to see deeply into the future. Attractive choices that lead to success will present themselves. It is when you start in conditions that are opposite to these that attractive options may not appear, and the right choices will be difficult to make
    2. Never copy others. One of the most valuable contributions you can make is to keep watching for changes in circumstances. If you do this, you can understand when and why changes need to be made long before the evidence is clear to those whose vision is not clarified by theory. 
    3. Never say yes to a strategy that targets customers and markets that look attractive to an established competitor. 
    4. If your team targets customers who already are using pretty good products, send them back to see if they can find a way to compete against nononsumption
    5. If there are no nonconsumers available, ask your team to explore whether a low-end disruption is feasible
    6. Never try to change the behavior or process of the customer
    7. Segment the market in ways that mirror the jobs that customers are trying to get done
    8. Look towards the low-end for the opportunity to change the basis of competition
    9. Develop competencies where money will be made in the future rather than where it was made in the past 
    10. Integration to modularity is a key cycle, competition forces modularity which leads to power which leads to integration (the rise and fall)
    11. Be impatient for profit and keep your company growing so that you can be patient for growth 
  2. Executives must answer 3 sets of questions to determine whether an idea has disruptive potential
    1. Is there a large population of people who have not had the money, equipment, or skill to do this thing for themselves, and as a result have gone without it altogether or have needed to pay someone with more expertise to do it for them?
    2. To use the product or service, do customers need to go to an inconvenient, centralized location?
    3. Are there customers at the low end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price?
    4. Can we create a business model that enables us to earn attractive profits at the discount prices required to win the business of these overserved customers as the low-end?
    5. Is the innovation disruptive to all of the significant incumbents in the industry? If it appears to be sustaining to one or more significant players in the industry, then the odds will be stacked in that firm’s favor, and the entrant is unlikely to win
  3. Other
    1. Need to develop products for the circumstance and not the customer, the chain needs to communicate the circumstance, and not necessarily to the customer
    2. Needs to by symmetry of motivation across the entire chain of entities that add value to the product on its way to the end customer. Win/win
    3. Disruption causes others to be disinterested in what you are doing. This is exactly what you want with competitors: you want them to ignore you. But offering something that is disruptively unattractive to your customers – which includes all of the downstream entities that compose your channel – spells disaster. Companies in your channel are customers with a job to get done, which is to grow profitably 
    4. To succeed with a nonintegrated, specialist strategy, you need to be certain you’re competing in a modular world. When the functionality and the reliability of a product are not good enough to meet customers’ needs, then the companies that will enjoy significant competitive advantage are those whose product architectures are proprietary and that are integrated across the performance-limiting interfaces in the value chain. 
    5. Core competence, as it is used by many managers, is a dangerously inward-looking notion. Competitiveness is far more about doing what customers value than doing what you think you’re good at. 
    6. The Law of conservation of attractive profits states that in the value chain there is a requisite juxtaposition of modular and interdependent architectures, and of reciprocal processes of commoditization and decommoditization, that exists in order to optimize the performance of what is not good enough. The law states that when modularity and commoditization cause attractive profits to disappear at one stage in the value chain, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage. 
    7. Emergent processes should dominate in circumstances in which the future is hard to read and in which it is not clear what the right strategy should be. This is almost always the case during the early phases of a company’s life. However, the need for emergent strategy arises whenever a change in circumstances portends that the formula that worked in the past may not be as effective in the future. On the other hand, the deliberate strategy process should be dominant once a winning strategy has become clear, because in those circumstances effective execution often spells the difference between success and failure
    8. Senior executives have 3 jobs when it comes to disruptive growth: be the interface between disruptive and mainstream business and determine which of the corporation’s resources should go to the new business and which should not; shepherd the creation of a process we call the disruptive growth engine; and to sense when the circumstances are changing and to keep teaching others to recognize these signals – start before you need to, get a senior manager in charge, get an expert team of movers and shapers, train the troops 

What I got out of it

  1. Great to read these books alongside Moore’s books – so much to learn from the general progression and regression of entire industries, what to look out for, and how to take advantage of them

The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton Christensen

Summary

  1. The research reported in this book supports his latter view: it shows that in the cases of well-managed firms, good management was the most powerful reason they failed to stay atop their industries. Precisely because these firms listened to their customers, invested heavily in new technologies that would provide their customers more and better products of the short they wanted, and because they carefully studied market trends and systematically allocated investment capital to innovations that promised the best returns, they lost their positions of leadership. What this implies at a deeper level is that many of what are now widely accepted principles of good management are, in fact, only situationally appropriate. There are time at which it is right not to listen to customers, right ot invest in developing lower-performance products that promise lower margins, and right to aggressively pursue small, rather than substantial markets. 

Key Takeaways

  1. One common theme to all of these failures, however, is that the decisions that led to failure were made when the leaders in question were widely regarded as among the best companies in the world
  2. The failure framework is built upon 3 findings. The first is that there is a strategically important distinction between what I call sustaining technologies and those that are disruptive. Second, the pace of technological progress can, and often does, outstrip what markets need. This means that the relevance and competitiveness of different technological approaches can change with respect to different markets over time. And third, customers and financial structures of successful companies color heavily the sorts of investments that appear to be attractive to them, relative to certain types of entering firms
  3. Case for investing in disruptive technologies can’t be made confidently until it is too late
  4. Established firms confronted with disruptive technology typically viewed their primary development challenge as a technological one: to improve the disruptive technology enough that it suits known markets. In contrast, the firms that were most successful in commercializing a disruptive technology were those framing their primary development challenge as a marketing one: to build or find a market where product competition occurred along dimensions that favored the disruptive attributes of the product. 
  5. It has almost always been the case that disruptive products redefine the dominant distribution channels, because dealers’ economics – their models for how to make money – are powerfully shaped by the mainstream value network, just s the manufacturer’s are. 
  6. Principles of disruptive innovation
    1. Companies depend on customers and investors for resources – difficult for companies tailored for high-end markets to compete in low-end markets as well. Creating an independent organization that can compete in these disruptive technologies is the only viable way for established firms to harness this principle. Promise of upmarket margins, simultaneous upmarket movement of customers, and the difficulty of cutting costs to move downmarket profitably create a powerful barrier to downward mobility. In fact, cultivating a systematic approach to weeding out new product development initiatives that would likely lower profits is one of the most important achievements of any well-managed company. Creates a vacuum in the low-end market that attracts competition
    2. Small markets don’t solve the growth needs of small companies – create small organizations that get excited about small opportunities and small wins
    3. Markets that don’t exist can’t be analyzed – those who need analysis and quantification before they invest become paralyzed when faced with disruptive technologies
    4. Technology supply may not equal market demand – sometimes “good enough” is competitive and established firms tend to overshoot what the market demands. Moves from functionality to reliability to convenience to price
    5. Not wise to always be a technological leader or a follower – need to take distinctly different postures depending on whether they are addressing a disruptive or sustaining technology. Disruptive technologies have a large first-mover advantage and leadership is important

What I got out of it

  1. Great way to think about how you could do all the right things and still lose. Helmer’s counterpositioning in action

Who is Michael Ovitz? by Michael Ovitz

Summary

  1. A powerful, vulnerable, and honest view into Michael, his sculpted personality and persona, and the reciprocation and unhappiness that comes from being one of the most feared men in Hollywood. “I would’ve had a much happier life if I didn’t develop the persona of being all-knowing and irreverent. It invited attacks and people looking to celebrate my downfall.”

Key Takeaways

  1. Ovitz grew up in California’s valley, in a very middle-class family. He was hungry from the start, working hard to make a name and life for himself. He started his career at William Morris Agency in the mailroom and worked his way up. He came in hours earlier than everyone and stayed later. Before there were hard drives, there were thousands of manila folders with a complete history of the company, its talent, and its decisions. He read through each and every one of them, impressing his seniors with his interest, dedication, work ethic, and knowledge. He became indispensable to one of the senior executives, doing everything from laundry to secretarial duties to finding stock tips for investments and this eventually led to a quick promotion
  2. Ovitz rose quickly through WMA, but got fed up with the nepotism and, with one of his good friends, Ron Mayer, they set out to start their own company. They wanted this talent agency to represent the stars and not an individual agent, they would be candid and upfront rather than sales-y, and would actively go find work for their talent rather than simply having job offers come in the door. This was to become Creative Artists Agency. CAA was a classic start-up in the first three years, posting zero profits. They used the strength of the big agencies against them. These incumbents all focused on the social life, big parties, and big spending. CAA decided to be more businesslike, putting the client first, strategizing on their behalf, knowing everything about them. They would seem almost square next to the incumbents, but people trusted them to deliver. CAA was out to flip the power structure from the studios to the artist themselves. They wanted to own every piece of the food chain and rake in fees on all of it. They had better information because they represented every side, knowing everything that was going on. This allowed them to be able to better match and package the best people and deals for each show or movie, was able to resolve conflicts better, and make better projections and pitches. They used this to their advantage, leveraging their better information in negotiations and tactics. 
  3. CAA had four commandments:
    1. Never lie to your clients or colleagues
    2. Always return calls by the end of the day
    3. Don’t leave people guessing
    4. Never badmouth competition
  4. Ovitz always started with an end vision in mind. Where do we want to go?
  5. He always started his talks and negotiations with current or prospective talent with all the negatives. It was like an inoculation for the flu
  6. Michael reflects that for much of his life he was black and white – you were either with him or against him and, while this helped him get to where he got, it also hurt him in many ways. Much of life is gray and for a long time he didn’t allow for great thinking
  7. Some lessons Michael learned early on in the movie business was that you need to have constituents who support you, you need to have connections, you need to love what you do, deals almost always fall apart 20 times
  8. Michael used to walk around the office with sheets of paper to make it look like he was going to a meeting when he was really just gauging the mood and temperature of his people and seeing who looked confused and out of sorts. For the first 10 years, he would call every employee who was out sick to see he could do anything. He wanted them to feel loved and taken care of but also for them to know that he was aware and kept a watchful eye over all of them
  9. Michael made it a priority for himself and his team to be well-versed in a number of topics and encourage those people to have dozens if not hundreds of magazine subscriptions so that they could knowledgeably talk about nearly anything the clients were interested in
  10. Being the calm in the storm is a great talent to have and very disarming for people. Another tactic Ovitz used was what he called “ground shifting.” If somebody threw out a number or idea that was supposed to be confidential, he would counter by saying, “no it’s higher” (or lower) and this would throw people off balance make him seem ominous. This also allowed him to gauge how confident people were and what they were saying. Michael was extremely soft-spoken and even more so in difficult situations. He wanted to speak so softly and calmly that people had to lean in to hear what he had to say
  11. CAA was a huge fan of gifting but never anything disposable like champagne. They preferred gifts that were sturdy, thoughtful, and that would last. They kept track of everybody’s interests, hobbies, and passions and would get them gifts based on what they knew and learned about all their clients
  12. A useful tactic is to get to your competitions’ friends and kids, having them convince their influential friends or parents about what you want. Listening and watching what the younger generations are doing is important – once you hit 35, you have no idea what the next trend or wave will be
  13. Beware of the totally natural human trap of thinking that because you succeeded in one realm that you can do anything
  14. CAA followed Nemawashi – a Japanese term where you had to have full consensus before somebody was brought in or promoted. This made onboarding smooth and people went all-in
  15. Ovitz helped broker deals between Sony and Universal and later Matsushita and Lew Wasserman. This brought CAA to the next level and propelled Ovitz to global deal-maker status
  16. In any multiplayer game, you want to be the outlier
  17. Just like in martial arts, if you aim for the target you lose all your power. You have to aim beyond it. The same applies in life. You have to think bigger and broader than you think imaginable and only then will you be able to achieve what you truly want
  18. Ovitz had his entire spine fused because he worked out every day, never giving himself a rest. His crazy travel, workout, and martial arts schedule beat up his body 
  19. Reflecting on his past, he misses most the camaraderie, the relationships of long-time friends, the loyalty and trust that he’s felt and seems regretful for having been so tough and hard on some of his people, straining his relationships when everything would’ve been better if he just focused on the people that he cared about 

What I got out of it

  1. One of my favorite recent biographies. His vulnerability, raw ambition and work ethic were all really interesting to learn about. A great reminder that you don’t want to sacrifice your relationships and life in pursuit of something else. Don’t put yourself in the same position where you reminisce and look back, wishing you had spent more time with family, been kinder to your friends and colleagues, and generally had a more balanced life. 

The Power Broker by Robert Caro

Summary
  1. The incredible, multi-dimensional story of Robert Moses who helped shape New York through its parks, highways and more by wielding untold of power for an unelected official. Robert Moses build more parks than any man alive, shaped the political structure of NY in his day and achieved so much but he also caused many of the structural declines, congestion and urban decline which plagues NY today. Moses was able to align the incentives of some of the country’s most powerful men and institutions (banks, labor unions, contractors, insurance firms, the media and even the Church) to achieve his goals. He was extraordinarily conceited and hard headed but is perhaps the most prolific builder in history. Moses was able to power through governors and other political machines until he came up against Nelson Rockefeller as governor who was perhaps the only man as ruthless as he.
Key Takeaways
  1. Robert Moses swam at Yale until he threatened to resign and the captain took him up on it
  2. Moses yielded unwieldy power as NY park and construction lead. He saw solutions where other men didn’t and was responsible for much of how NY’s parks look today and for its general layout. He built the vast majority of highways, bridges, public housing, private housing, playgrounds, and more. Hardly any project built during his tenure was done so without his approval
  3. Was a staunch believer on promotion through meritocracy and was the ultimate idealist and optimist. Considered self and convinced the public that he was the antithesis of a politician and was able to even fight off FDR. However, this was more legend than fact and he was very inefficient with his projects. He used economic power towards political ends  He focused corruption and it became so powerful that it took the whole city off of its democratic bias. Fought against patronage and bribes
  4. The longevity of Moses’ power was unbelievable. From 1924-1968 he wielded almost absolute power in NY with hardly any governor or mayor ever challenging him. No other public official has come close to building nearly as many public works as Moses. He was America’s greatest builder and during this time most states had no state parks, few roads and highways. He had the greatest influence on the look and layout of American cities than any other person. He had to move hundreds of thousands of people in order to build his projects, very often the poor. His projects were predominately for the rich And this lead to social strife, lack of housing (although he built more housing than anyone else) and congestion which clogged the city
  5. Moses had the power of an emperor and lived like one with scores of people at his beck and call. He destroyed dozens of men’s political dreams who dared challenge him in some way
  6. Certain aspects he looked to publicize and others he kept very secret
  7. Power is a drug and Moses was one of its largest users
  8. Family were German Jews and he got his ruthlessness from his grandmother and mother. His mother was especially fond of building projects which she helped with while working for settlement projects. He was his mothers favorite, read a lot and very broadly, wrote poetry, was a loner
  9. “Before government can become humanitarian it must become businesslike.”
  10. Before he was in a position to do anything, he already had the vision of how to reform NY from highways to tennis courts. Vision like few others and from a young age was the most able man to take on the task of civil service reform. He did not care at all for money, he simply wanted to see his ideas come to fruition. He was impatient, self assured, very bright and arrogant. His years of civil service reform and standardization lead to zero results as he didn’t adequately take into account greed, self interest and power
  11. By age 30, Moses had no full time paying job, had see none of his research implemented, had a family that was struggling to survive but that all changed once he became Mrs. Moskovitz chief of staff. She was one of the most effective and powerful women in NY government and quickly taught Moses how to actually get things done
  12. A deep, lifelong and fruitful relationship between Moses and governor Smith lead to a lot of reform. Smith turned Moses from idealist to practicalist, willing to sacrifice in order to bring about real change
  13. Moses was one of the best bill drafters and was able to sneak in some legal jargon so that he could take robber barons land legally even if they didn’t want to sell. However this wasn’t even enough and he broke the law but had such strong public opinion behind him that he didn’t get into too much trouble. He started building the park during trials in order to sway the Judge to not waste public money. He eventually won and gained much confidence and political experience through these lawsuits
  14. The congestion, pollution, heat and more creates the perfect storm for a public who desperately needed places to escape the city and cool down. Moses was always on the side fighting for parks which to the public made him inherently on the good side
  15. Moses had incredible vision and was extraordinarily multi dimensional. He knew law, engineering, politics, statesmanship, architecture, psychology and more. He drove his people harder and further than anyone else would. He was an incredible leader who could motivate his men, make them feel like they’re part of something huge and have a good time doing it
  16. Much of what Moses did could not have been achieved without Governor Al Smith. Smith was a visionary and a masterful politician who lead New York through a difficult period and made it one of the most revolutionary and prosperous states
  17. Moses was extremely efficient with his time. Holding meetings in his car, having a desk with no drawers so problems couldn’t hide
  18. Perhaps more than any other quality, Moses’ ability to pick and organize men set him apart and allowed him to achieve what he did
  19. A key way to convince people is to keep your arguments simple. Among his other great abilities was to delegate completely and sell men his grand vision and purpose
  20. Moses and FDR had bad blood due to competing for parks and Moses appropriating rich, powerful men’s land in order to build these parks. When FDR became governor of NY, he wanted to oust Moses but couldn’t as the only way to do so was through charges and public opinion was so strong of Moses
  21. The public parks such as Jones Beach were so successful that the entire nation and even foreign countries visited and were amazed by the size and attention to detail. Almost as many people visited the New York State parks as all other national parks combined. Amazing use of human psychology by making people feel bad for littering by having college kids pick up trash with their hands and having loudspeakers saying “thank you for helping keep our parks clean!”
  22. Ran for governor but lost to Lehman in 1934 due to popularity of new deal and his unwise public attacks
  23. LaGuardia became mayor and kept Moses in power which hurt his relationship with FDR who was now president. Moses regained the favor of the public as it became public that he was trying to be ousted by FDR which they didn’t approve of
  24. LaGuardia’s and Moses’ relationship was kept private as it would have hurt his political reputation. “The Little Flower” helped improve NY’s politics morally but was a very difficult man to work for
  25. Moses was a natural bully and like most bullies, if you stand up to them they will usually back down and respect you more for it
  26. Authority is delegable. Genius is not. Moses was trying to do too much too fast and sacrificed quality
  27. Moses built almost no parks or recreation centers for black citizens in black neighborhoods
  28. Worked at improving congestion through Triborough bridge, Long Island Parkways and more but most of the time it actually increased congestion
  29. Riverside Drive was Moses’ lifelong dream and he had to be amazingly creative and resourceful to come up with the more than $100m to make it a reality. Unfortunately he gave people in cars most of the riverside view as the road was closer to the water than the actual park. Also, he didn’t put much money or attention at all to the parts of the park in poorer areas which was not unusual for Moses
  30. Moses was so ruthless he cut his brother out of his mother’s will and almost never spoke to him or his sister. He convinced everyone his brother had committed some heinous crime though nobody knew what he supposedly did
  31. Moses was money fair and power hungry. Every relationship, appointment and dealing he made would somehow help him gain influence over people or the process to get his vision in place. Few realized what he was doing until it was too late. He was a discrete power broker who often held sway over governors and mayors and often wielded absolute power.  He was a master of aligning multiple powerful people’s or group’s interests behind his vision to accomplish it
  32. Hospitality was one of Moses’ most potent tools. He used he psychological edge of being host very effectively. More deals got done at his brunches, dinners, plays and other events than at city hall
  33. Moses rigidity in only building roads instead of other modes of transportation like subways meant ever increasing congestion – stealing hundreds of hours per person per year and making the whole experience intolerable
  34. Moses’ aura of invincibility lifted some during the Battle of Central Park when he tried to convert part of the park into parking for a high end restaurant. Wealthy, white mothers took on the battle and it was one of the first time in decades that Moses had to back down. After further quarrels with free Shakespeare plays in Central Park further eroded his public image in the late 1950’s but his power was still totally intact as the mayor couldn’t fire him and many still relied on the purse that only Moses had access to
  35. “New money buys things, old money calls in favors.” Referring to Rockefeller family power
  36. Moses’ power began declining once Nelson Rockefeller became governor and eventually lost his role as head of the Parks Commission as well as others. However, the 1965 World’s Fair got him back some of his power But not his popularity. His antagonism annoyed many foreign governments and hardly any major powers ended up being involved. He created a sense of controversy around the fair rather than mystique and wonder. Moses also made the press his enemy which only hurt his image and the World Fair’s
  37. At the age or 79, after 44 years of power, Rockefeller was able to outmaneuver Moses and strip him of what Moses held most dear, power. He was allowed to remain on staff and be in charge of one project but this was merely a pity gesture to a man who was used to have tens of millions at his disposal and dozens of projects
What I got out of it
  1. Amazing portrayal of a man I had never even heard of! Moses achieved so much but also caused many of the problems which plague NY today and will likely plague it for the foreseeable future

Influence: The Psychology of Persuasion by Robert Cialdini

Summary
  1. For years Cialdini studied which factors and techniques would induce people to say “yes” most of the time. He studied compliance professionals through participant observation and learned that six laws are used which correspond to human psychology. These laws are used (often maliciously) to get people to say “yes” without thinking.
Key Takeaways
  1. There are 6 weapons of influence – RCLASS
    1. Reciprocation
    2. Commitment and consistency
    3. Liking
    4. Authority
    5. Social Proof
    6. Scarcity
What I got out of it
  1. Fantastic book which explains the various influences which we can use (or can be used against us) to get others to agree. These influences can be used for good purposes or deceptively but they are designed to get past our rational brain and attack our automatic responses. Cialdini uses a great term, “click, whirr” to show when this automatic process is being used. Highly recommended

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The 48 Laws of Power by Robert Greene

Robert Greene lays out 48 laws which will help you in you the mastery and conquest of your given field. He draws on historical examples of people who have observed or transgressed these laws as well as portions of fables and other short stories to help illustrate each law. A bit Machiavellian but better to be aware and not use than be taken advantage of due to ignorance