It is good to be back

Reading through the pages of this blog over 5 years later has been an interesting experience. There was probably a little more truth in the ever increasing, never changing comment in 2006 than I realised. I feel like a lot has changed, but many of the comments from 2006 still strike me now.

A brief catch-up of 5 years in private equity

Back in 2006 I was lucky enough to be training as a management consultant with an excellent set of managers and partners who tutored me.

In the five years since then I have learned a lot through the excellent people I worked along side at two leading Private Equity firms: one leading British company investing in medium-sized companies across the world; the other a leading American firm who typically buy very big companies through leveraged buyouts.

Private equity can be very complicated

Private equity deals are logistically complicated. One typically involves a very large number of people, a lot of thinking carefully, analysing complex data and trying to make sure that you have really thought of everything that will be needed to help the company grow and become an even bigger success. All of this is done under a lot of time pressure (a few weeks of real information access to buy a company worth several billion pounds / dollars).

But as you meet people of all walks of life, some billionaires, others with much less, the similarities strike you much more than the differences....

... and the things which matter are often very simple

A life worth living

Building on from What are we working for? a very moving incident occurred recently which needs a small diversion from the usual semi-business related themes to discuss life in general.

A few weeks back I met with a very good friend called John* who with tears in his eyes mentioned to me that his wife wanted a divorce and was cold towards him, not hostile, but worse -- painfully cold.

Now John is a very successful business man with his own firm which is incredibly powerful and often finds himself away from home dealing with clients. John is incredibly well respected by his employees and clients and well liked by all. John has a lovely nine year old daughter.

If the divorce goes through, under British law he will lose a lot more than half as he does not want to displace his daughter by selling the home that he has saved so hard to earn for her and is not guaranteed the one thing he really cares about -- time with her.

So how can this happen?

Well, I am no Relate counsellor, but here are some questions to consider:

- Why do you work long hours and away from home? Who are you doing it for and do they appreciate it?
- Do you believe that a relationship left alone deteriorates over time?
- Do you know what leaves your partner feeling loved?[1]
- If you lived as you do now from now until your death, would you be happy? If not, why not?

- Finally: What are you going to do about the answer to the above questions?

[1] The 5 languages of Love (Amazon), is an incredibly good book which deals with the different ways in which people show and receive affection. Every man should have at least skimmed this book. It is inevitable that your relationship will at some point hit rocks and hopefully this will help prevent it being ship-wrecked.

*names may have been changed to protect the innocent

Recommended Reading... the power of being different

Paul Graham has written an essay on the power of not being in the "in crowd". It discusses the power of being at the edge of the activity along with other things.

Ironically this essay sums up in a much more insightful way than I can manage my views on the power of being small.

This is truly a time of incredible opportunity for the world in general and (I believe) the United Kingdom in particular. David has a few years in which he can truly take on Goliath with new ideas.

How can this be true?

Well

• the development can be done with the help of numerous off-shore companies
  
• the marketting can be done inexpensively through Google's Adsense
• the distribution can be done through technology enabled deals with companies such as FedEx
• the brand can be built through the viral networks online as well as through traditional channels
• even the billing can be outsourced through use of PayPal along with several online merchant banking providers
  

The internet's main strength is that it allows everyone to compete... at times of change like this a small gap opens up for those who will dive through and grow quickly. Google have, ebay have, amazon have. Could you?

This diversion is totally off the topic of Paul Graham's essay and not quite as insightful...

p.s. For a thorough look into this topic, I recommend "The World is Flat" (Amazon), it is moderately heavy reading - but once you have conquered your way through it you will be thoroughly informed!

Consulting - it so much easier with two

In the world of computer programming there is a practice called eXtreme Programming[1] which suggests that two roughly equally matched programmers will find some genuine synergy and work better when working in tandem than both working separately.

How about extending this idea to other intellectual activities - e.g. consulting?

Over the past year, I have been lucky enough to regularly work with a very good manager and together we achieved a lot of work and managed to get a book published on the side[2]. Reflecting back on why we were so productive, I realised it was due to the very close collaboration where I could immediately ask for help if I thought it would be more efficient to and visa versa.

Would this work in any job where people know different amounts or is it unique to consulting? I am not sure, but my guess is that it would.

In (almost) the words of A.A.Milne, "It is so much [easier] with two.."

Notes:
[1] eXtreme Programming - XP is a commonly used programming style with start-ups and small teams. It can lead to very high productivity rates with fewer errors than solo programming.
[2] Clamped by David Blackwell - "A fun read...the perfect trashy novel for your next winter holiday", MethodMag

Change - Ever increasing, never changing?

Change is moving faster. People are having to be more flexible than they have ever been before and businesses are facing challenges which the sleepy businesses of yester-year never had to worry about in their happy, stable existences. Is this true?

A classically uninspired thought for the day:

Read any business book of the past hundred years and they will all discuss the unrivalled rate of change at the time the book was published and the step change in difficulty between the last five years and the current one. My brain rejects this hypothesis as being far too simple, if we really were on the global CAGR [1] that this kind of change would represent then our collective economies would be signficiantly larger.

Is it an effect similar to the accoustical shepherd effect[2]? It sounds like it is continually rising as your brain first focusses on one band of noise increasing and then subtly switches and focusses on another band of noise increasing. In fact the shepherd tone is simply an unchanging and cyclical tone which just sounds as it is ever increasing/decreasing.

In a similar way, each rapid area of change in business appears to become less important with time, but a new area of change appears each time the brain adjusts to the old change, with that change increasing until it too is superseeded.

Listen to the shepherd tone and consider the effect. An identical cyclical tone sounding each time like it is (in this example) lower than the time you heard it before.

Perhaps, it is the same for business, and although we are learning from the latest new discovery, in fact there are a number of sound principles which are proved true every iteration around the cycle.

[1] CAGR - Compound Annual Growth Rate: the % rate at which something is increasing each year in comparison to its previous years. A CAGR of 10% on an initial size of 100 would = 133.1 after 3 years... (100 + 10% = 110 in the first year. 110 + 10% = 121 in the second year. 121 + 10% = 133.1 in the third year)


[2] For more information on the Shepherd tone see Wikipedia's article.

What are we working for?

Throughout my childhood I moved school every two years and so have attended nine educational establishments in my life. In each of these it was interesting to discover that although many things remained largely identical there were one or two slight differences which made the difference.

I have noticed something very similar in the working world, having worked for different organisations as an employee and then as a consultant. Largely companies appear very similar, but there are one or two subtle shifts which seem to make all the difference.

It has lead to this fairly self-evident observation, which is by no means new: People work towards what they perceive to be winning.

Interestingly this view of winning can be easily forced from outside and does not have to be entirely rational to start the herd mentality conforming with it. For example, a close female friend, Rachel*, has been working in a large British bank as a personal banker. In the personal banking world of this corporation you are awarded points for achieving certain things and are awarded a small increase in salary each year in line with the points you have accrued.

Now Rachel intends to leave within then next six months to train to be a social-worker, but still persists in attempting to gain points, even though these will never be of any value to her. She is finding collecting points difficult as she is still fairly inexperienced and people are refusing to help her.

Two observations from this are:
1. The point system is fundamentally flawed
2. Even though it is of no gain to her and actually harms her to push for points, Rachel persists in pushing for points anyway

The point system is fundamentally flawed

Now this point system could be easily refined so that it encourages training of others. This "viral training" is vital to the bank keeping its recruiting and training costs low, but is entirely unrewarded in their fundamental definition of winning: points.

This could easily be remedied by providing some kind of a multi-level marketting approach to points, whereby you achieve a percentage of those who count you as "influential" in their training, encouraging a more collaborative effort.

This new point system would also be flawed: any point system will always be flawed, but the weightings on this new system are much more flexible and encourage collaboration more fundamentally than the law of the jungle points system which is only likely to work in a Machiavellian hard-sale environment

Rachel reacts illogically and conforms with the point system anyway

Even though it would be more beneficial to her colleagues perceptions of her if she were to give her points to them and would not be even slightly detrimental to her prospects as she is leaving before they can be cashed in, Rachel still feels an emotional pull towards the built in definition of winning - to go where the group goes. And Rachel finds this very stressful.

Which leads to two questions, neither of which is particularly deep, but are simply these:

Firstly: Why do we let others' definitions of winning affect our behaviour so fundamentally without questioning them?

Secondly: When the definition of winning does so obviously affect how the vast majority of people act, why don't companies (and governments) ensure they keep them understandable, flexible and relevant to changing environments?

*names have been changed

Mastering the Corporation - the importance of forgetting

Published as a fairly obvious statement of corporate practice after being quizzed about this for the tenth time.

Assertion:

To do well in corporate life, it is essential that you can freely forget what you are doing without this being an issue. If you can not forget about the trivial tasks you will never be able to fully concentrate on the tasks you are currently doing

To be able to fully forget you have to have a fairly solid system that remembers for you. I believe that one of the most important thing any new employee can learn is how to keep a successful todo list and use the calendar functionality provided by the computer to remember for them.

Now, as with most of these observations, this is obviously not rocket science, but doesn't seem to be common practice either.

Consider James*, a new consultant for a top consultancy. James was doing a fairly solid job assisting his team, but was not keeping a regular todo list and so could not cope with taking on more tasks than he could realistically remember at any one time. In the meritocratic ranking system of the consultancy, James was not well ranked.

After being taught about a strict todo list format and note keeping he rapidly progressed and within six months was being ranked near the top of his peer group. James is not a-typical! The majority of recent graduates need to hear the same basic message.

Here is a very basic suggestion of how to keep a todo list:

1. Keep the list fresh
2. Ensure list items are 'bite sized'
3. Keep enough information on each list item to be able to do it a month later if needs be
4. Do not do anything which is not on the todo list
5. Make it easy to find todo items in other notes

Keep the list fresh
Start a new todo list each day and transfer the outstanding items from your existing list to the new list. This will remind you of what you need to do each day and ensures you have properly considered each item of work you need to do (it also stops you needing to think about your work at home).

Ensure the list items are 'bite sized'
If you todo list items feel too onerous, you will procrastinate rather than achieving them and it is very hard to know when they are finished. Bite sized todo list items give a continual sense of achievement as you can easily do the task in one sitting and sign it off. E.g. "Draft internal memo on performance reviews" rather than "Send out memo on performance reviews" if sending out a memo requires drafting, agreeing and then sending.

Keep enough information on each list item to be able to do it a month later
Your todo items should be totally self explanatory and include information such as who gave you the todo and when they gave it to you. If you have further notes which the todo is part of then the page should be referred to.

The difference between a reasonable employee and a good employee is the good employee will make sure that everything they have been trusted with gets done eventually. To be able to do this you need to be able to have totally forgotten what it is you needed to do and then been totally reminded by the list.

Do not do anything which is not on the todo list
This is pretty self explanatory. The point is that it takes discipline to stick to the todo list and if you do not universally put every item onto the list then eventually important items will miss the todo list and your faith in it being a substitute for your memory will be reduced.

Make it easy to find todo items in other notes
When taking notes you will want to mark out your 'actions' or 'todos' in context to where you were given them. These should also be transferred to the todo list. It will make it easier to find these items if you always mark them with a symbol at the same place in the page (e.g. I always draw a box in the left margin on the same horizontal as the note in the page).

Now this is all very much common sense, but that doesn't stop using these lists properly ridiculously powerful. You will be surprised how well people react to you telling them you have completed something succesfully for them which they forgot they ever asked you. How? The todo list!

*Names have been changed

Training your brain, strength of mind - if it works for fitness, why not intelligence?

I had the privilege of chatting with a good friend who is a phenominal athlete, having succesfully competed for his country on the international stage. He is now a successful management consultant with Accenture in the UK.

We were talking about the different dimensions of intelligence and how to train them. Most people accept that you can double your raw strength, flexibility, stamina, agility and other physical attributes through a focussed campaign in the gym. So why do so many people still regard intelligence and creativity as fixed?

We agreed that there is a rough parallel between intelligence and physical strength and that intelligence and mental ability can be trained.

These were our parallels from Physical - to - Mental

• Speed - Mental Arithmetic, Creativity,
  
• Stamina - Comprehensive thinking, patience, persistence
• Strength - Combatitative argument, Logical ability, Powers of persuasion
• Agility - Lateral Thinking, finding multiple solutions
• Toning - Well informed, past performance

I believe that like your physical strength, your mental strength can be trained and after just one year of working at it, it will be very obvious to everyone around you that you seem more intelligent. This is how...

1. Mental Arithmetic - Maths is simply the continued application of very basic components. I have taught maths to 13 year old deliquents and Cambridge University Students and the problem is nearly always the same - a lack of the grasp of the basics. If you want to improve your ability to manipulate numbers you must continue to practice the basics on small numbers
2. Creativity - As the numerous creativity seminars say: Creativity is about being able to link pieces of thought which are not usually linked. Your creativity will only improve as you deliberately expose yourself to different ways of thinking and ask yourself questions which force you to be creative "How could [bizaare idea here] help me with [thing I am working on]?"
3. Comprehensive Thinking - Deliberately and systematically try to break down a problem into areas which do not overlap but cover everything (Mutually Exclusive, Collectively Exhaustive as the McKinsey Way puts it[1]). There are a number of commonly used techniques to break things down: e.g. chronologically, categorically, through a paradigm (e.g. SWOT, five forces in business) using these will improve your ability to think for a long time about the same problem without wasting effort
4. Patience - Others have written far more wisely on patience than we can[2]... Patience is a virtue, possess it if you can, seldom found in woman, but never found in man
   
5. Persistence - This is the same for thinking as for physical exercise, you need to have a strong reason why you are doing what you are doing - why do you want to get there?[2]
   
6. Combatitative Argument - Combatitative arguments require the use of logic and facts under pressure and will build your skills while doing this. Formal debating is one way of doing this, but the pub is the preferred location of most!
   
7. Logic - Logic is a skill and can be learned. Learning to think logically requires a lot of discipline, but little natural ability. There are a number of moderately good web resources for critical thinking (example), recognising common logical flaws can only help. There are also one or two very easy to read introductions to logic for those who prefer printed material [7]
8. Power of Persuasion - To be viewed as intelligent you require more than just the ability to shout loudly and logically. Books such as "Getting to Yes"[3], "Getting Past No"[4] and "Crucial Conversations"[5] are all recommended for helping you see what is important and learning to deal effectively with different people in high pressure situations
   
9. Lateral Thinking - A phrase coined by Edward De Bono to describe the more creative and flexible thinking rather than the linearly logical mind[6]. It is not simply as narrow as being able to solve puzzles in Christmas crackers
   
10. Finding Multiple Solutions - This is simply personal opinion, but many of those who I regard as deeply intelligent have not stopped at the first solution that worked but carried on pushing until they got to the best they could (and then normally pushed some more)
    
11. Well Informed - However fast you think, your mind can only work with the information you have. Find ways of being interested in a variety of subjects and don't stop learning!
    
12. Past Performance - A large part of the perception of your intelligence is simply being consistent in your abilities.

Leisurely reading for the next year:

[1] The McKinsey Way, Ethan M. Rasiel (Amazon) - Consulting is all about rigorous thinking and this book gives a special insight into the way this works and includes a number of the thought processes consultants follow when breaking problems apart
[2] 7 Habits of Highly Effective People, Stephen Covey (Amazon) (Webpage) - An interesting look into the way that people think and operate. A classic with well over 10 million copies sold.
[3] Getting to Yes, Roger Fisher, William Ury, Bruce Patton (Amazon) - "Getting to Yes" is a book solely about negotiation and is heavily recommended reading in nearly all business schools
[4] Getting past No, William Ury (Amazon) - How do you get people to Yes if all they do is cheat and shout No? From one of authors of "Getting to Yes", this book deals with the problems of negotiating with difficult people
[5] Crucial Conversations, Kerry Patterson, Joseph Grenny, Ron McMillan, Al Switzler (Amazon) - This book was recommended by Stephen Covey and deals very effectively with understanding and controlling your emotions to reach an outcome you would be proud of in the important conversations in your life
[6] Anything by Edward De Bono who coined the phrase "Lateral Thinking". The six thinking hats (Amazon) is widely used from the civil service through to organisational thinking. Its use is subject, but the concepts are very strong (although you may find his writing style patronising!)
[Added Comments]
[7] Being Logical: A Guide to Good Thinking, D. Q. McInerny, Dennis Q. McInerny (Amazon) - This comes as highly recommended by the friend mentioned in this article as being a small, cheap and easy-to-read starting point to logic.

Why Some Technology Companies Just Don't Get It

In technology marketing there is the very useful concept of Early Adopters, Early Majority, Late adopters etc.

The idea being that a new product will at first be tried out by a small number of very technically literate people who always like to have "the latest thing" and then there is a gap in need before the early adopters move to the early majority (the mass market who would like to use the product to solve problems). This gap has been referred to as a Chasm[1], due to the number of products from both small and large companies which never make it to the mass market and fail

The thought for the day is quite simple and it is this:
Your first customers for a product want to think about the product. The market as a whole doesn't want to think about the product.

Just consider the success of Google:

The first users of Google were very excited about how clever the search facilities were and wanted to understand PageRank(TM) and how it worked

However, most people use Google because they want the information and don't want to think about how it works.

Consider the failure of most high-end mobile products:

Although the first users think the product is great and are quite happy with installing little programs on their phones, the mass market just doesn't want to have to learn something new which isn't going to obviously help their lives, whether that something new is how to install the software or whether that something new is how to use it and whether they need to worry about being ripped off.

Liam argues that technology companies main problem is not that their technology is not absolutely outstanding, but that their products require thinking about and the mass market doesn't want to think... Just a thought.

Possible areas where standard productisation may cause problems and where clever, minimum-think solutions could solve them:

• Current convergence products - convergence seems to currently mean finding and then learning to use another product on top of the ones you already have
• Digitizing Television Channels - Following this argument to its logical conclusion, part of the reason people enjoy television is because it gives you a very good excuse not to think for a long period of time. Channel hopping is OK, but if people are crying out for really interactive play lists in television media then why haven't the majority of people sorted proper playlists for their ipods?
• Mobile phone programs - Until an easy, generic way of getting new programs onto phones the only programs which will work in a big way are one of:
  
• massively time saving so people cry out to have them added and bother to learn
  
• already installed on your phone and sold through manufacturers
• aimed entirely at the early-adopter market
  

Interesting Reading:

[1] Crossing The Chasm, Geoffrey A Moore (Amazon) - This book is highly recommended to technology based businesses with limited marketing experience. Of course you could learn this the hard way, but for about a tenner and a weekend's reading you too will be able to absorb.

[2] Also worth considering - Confessions of an Advertising Man, David Ogilvy (Amazon) which is a very engaging and easy read. If you have no current experience of advertising at all, this is the ideal introduction. The down side is that it does not include any online techniques, so some have argued that it is becoming dated

[3] An article in The Register on the 30th May 2006, appears to back this point up:

Irish mobile operator O2 released results of its survey which it claims shows that "complexity turns business users off technology" and that many companies surveyed found technology "too confusing".

Welcome to the Daily Liam

The world is changing at an ever increasing pace. The challenges being faced are always new. Today we are truly standing on the shoulders of giants, taking for granted countless hours of human endeavor and intelligence. The incremental increases afforded by numerous individuals small contributions have allowed this advance.

The Daily Liam contains opinion which may not be the author's own and should certainly not be attributed to the organisation the author is working for. My opinions are based on the way I have perceived the world through my experiences, if you disagree, please feel free to write a short response stating why. Incremental increases from small contributions...