Playing Dice by René Schützenberger (circa 1910).

Peter Bernstein’s Against the Gods captivating history of risk rekindled and made me look with new eyes the regression to the mean trading approach —where many good methods take their cue.
For more, visit con-tango, my trading blog…

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Toilet paper: a delicate product that gets the job done.
© FotografiaBasica

I can’t think of anything more critical for a company than to learn how to provide value for its customers.

Understanding your customers’ needs is at the core of your company’s well-being.

It’s the foundation that will allow your company to grow, by showing you where to improve or innovate your products or services. As we’ll see later on, it’s also the backbone that allows you to organize and set a direction for your company —without this knowledge, you cannot control, less manage a company.

To begin with, let’s not forget that a need was the original spark which started the company. A start-up finds a need in the marketplace, then offers a service to fulfill this need. If someone sees value in this service, greater than its costs, the company is in business because its gained a customer. Which reminds me of Paul Orfelea’s comments on opportunities:

“Look at places where people are standing in line. How much money are they making? That’s how I started my photocopier business, Kinko’s.”

You might want to check Tom Hulme’s enlightening presentation on visualizing a simple business model to get a clear perspective of the interactions between the different parts of a company.

(Also from IDEO, I found this must see presentation of Muhammad Yunus’s (from Grameen Bank) brilliant idea of a sustainable Social Business, as opposed to a charitable one, where reinvesting is needed to keep the charity from floundering).

True. Shareholders and employees, as well as the community, have an important say in what a company can do, but without the fickle customer there is no business! You could make your shareholders happier for a while by cutting back on your product’s safety, quality, delivery or cost, but you’ll risk the company’s long term survival by supplying a poor product to the customer. The same can be said if the company does not care to retain the right talent in a competitive world, nor, if the company harms the environment while providing its services.

It’s smarter to ask your customer how your service helps him get his job done. The customer is interested in making a hole, not the drill.

According to Lance Bettencourt and Tony Ulwick from Strategyn:

Companies must shift their attention from the product and instead focus their requirement-gathering efforts on the execution of the job that the product or service is intended to perform.

In order to do so, companies need to get closer to the customer. Let me give you an example. A poorly rated customer service operation was primarily focused on reducing the total time it took to service a client. When customers were approached, they revealed that their most important metric for the quality of the service was related to the time they had to wait before anyone picked up the call. If the call was answered promptly, they assumed that from there on the customer rep was hard at work on their issue, so they didn’t mind waiting…

You have to ask lots of questions. It’s always iterating between your ideas and the customer’s answers, but you must be very careful and precise about how you state questions and the resulting customer requirements. You cannot afford to err, your product offering depends on determining your customers true requirements. How can your company survive if it offers the wrong products? How can it possibly grow?

In Tony’s presentation Understanding the Customer Need, he recommends applying a lean framework to the job that the customer needs to be done, with metrics to judge the success at every step of the process.

Having this in mind, Tony recommends going over the following checklist to determine the metrics or needs of a customer:

1. Use a precise structure for the requirement statements.

The requirement statements must be brief, unambiguous, consistent and timeless, hence they cannot contain specs nor solutions, nor references to technology.

We also know that we may improve the speed of a process, its predictability and output. So, your questions must include these measurable characteristics in order to obtain capable metrics that capture the customer’s measures of success.

The preferred requirement statements structure should look like this:

Direction of Improvement	Minimize
Unit of Measure	the time it takes
Object of Control	to verify the accuracy of a desired outcome
Contextual Clarifier	with a customer
Example of Object of Control	for its meaning, exactness, completeness, etc.

2. Build a job process flow map.

Through personal interviews, deconstruct the job process, building a job map with the steps needed to get the job done and the metrics that can measure customer satisfaction at each step —a la value stream diagram in lean process analysis.



The above general process chart is a good starting point to build a job process map.

3. Conduct ethnographic interviews.

These interviews have the purpose of giving the interviewer context, so he will be a better interviewer to extract the requirement statements during his next customer interviews.

4. Conduct the bulk of the interviews.

Once the context and the questions have been digested, it’s time to get your interviewers out there to get as many requirements as you possibly can.

5. Construct the job map.

Reconstructing the job map with its metrics is a way of verifying that you’re not missing anything.

At the end of the process, you will have a customer rated requirement statements list. The features (or requirements) that present a low customer satisfaction score are prime prospects for innovation.

With this list of requirements, you can also start the strategic dashboard for the company. You have the rows, or requirements. Then, you need to determine the how’s, or the columns of this table. At this point, you should start defining your vision and mission for the company —the how things are going to be done around the company…

But, that’s another story that I’ll leave for a next occasion.

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Feelings show us the direction to follow.
© José Carlos Pires Pereira

If you don’t know where you’re headed, you’re most likely not advancing…

We all need an objective, a magnetic north, or a vision of where we want to go, to help us set the course for our journey in life.

If we don’t know where we’re going, we will soon feel lost and disheartened. It’s pretty much the same whether it’s an individual, a group or an organization. If it feels like we’re circling without a clear purpose, then we feel the emptiness of missing something…

You don’t have to see the North Pole, but you need the needle of the compass to reassure you that you’re moving in the right direction. If you feel good, you’re warm. If you feel happy, you’re warmer. And, if you’re passionate about what you’re doing, then you’re on a hot trail.

Since we’re all unique, each one of us will fulfill their lives only by recognizing and traveling on their own distinctive trails. The stuff you do along the way with passion is also known as your mission in life —it’s what you were meant to do.

But, can we get an idea of how the North Pole looks like? Or better, is it possible to sketch a vision of our destination?

Again, it’s a question that may be answered through your feelings: What brings you joy?

The first thing that comes to my mind is that I enjoy being with friends. In an ideal setting, we’d be asking and telling each other our dreams and how we’ve fared so far, chatting about our children, our work, our friends, our trips, and so many unimportant things in between… No need for heady subjects, no need to pose… we can be ourselves.

Why not have a friendlier environment at work?

As a matter of fact, nowadays, the vision of a friendlier workplace is mandatory. We can’t hide behind the excuse that we didn’t know. Modern Psychology has proven that creativity and innovation, as well as performance, are enhanced within a nice environment. It’s obvious and plain old common sense.

The golden rule is to be nice to others. And, haven’t we been preached upon (literally) for centuries to treat others as we would treat ourselves? Isn’t compassion the one thing all religions concur that will make us happy?

A unifying vision is to have compassion with all other living things.
(or, to be nice, to feel for others…)

Once we grasp this simple objective, we can reverse engineer what we need to do to achieve this goal. For example, you’ll find that in order to have happy faces in the workplace, among other things, the company has to be doing well financially… which in turn means that it has to have happy customers that value our products and services.

And, customers are happy when we give them more than they expect.

How about helping the community and taking sustainability actions? Wouldn’t our customers like to be around us? Wouldn’t we also be happier?

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Shanghai - Pudong Skyline

To know and understand what’s going on is basic to our development as individuals in an ever faster paced changing world.

We must be able to see our opportunities.

Let’s take a close look at the major cross-currents of our current situation.

1. Technology brings us closer to god.

Heidegger made this bold statement alluding to the fact that technology brings us forth by increasing our knowledge of doing. So much so, that some day we may well approach the idealized virtues of a Greek god: know it all, omnipresent, omnipotent…

Haven’t we made huge advances on the first two with the Internet already?

Technology has allowed us to grow at an accelerated pace: almost doubling the efficiency of computer chips every year, according to Moore’s law.



Raymond Kurzweil, Courtesy Wikipedia

If we agree with Ray Kurzweil, and technology continues to grow as predicted by Moore’s law, then all known problems will be solved within 20 years and the universe will be intelligent in 300 years.

Let’s stop for a moment to absorb Kurzweil’s implications: among other things, within 20 years we will probably have a chance of living an eternity… Wow!

To understand technology, we must realize that it’s really about having machines do the work, or automating, or eliminating the labor involved.

Take Facebook, once it’s coded, the machine takes over, and the users provide the content. Facebook is what? five years old and it’s valued in the hundreds of billions… the rewards are enormous for the developers and investors.

So, there’s one hell of an opportunity right there: coding is automating, which is highly rewarding. Don’t like coding, wait for the Facebook IPO, or it’s cousins.

2. Labor in China is cheap.

During the last 30 years, the labor arbitrage between the Chinese and western labor wages has made investors stampede their manufacturing into China, to take advantage of the inexpensive and bountiful Chinese labor.

Investors had no alternatives, either they moved their operations to China, or their competitors would…

China became an investment bottleneck, generating a liquidity glut in the world, because it made no sense to invest elsewhere, and China did not have the capacity to absorb it all.

There was so much liquidity in the world, that some gals got too creative, and some bankers too careless. The liquidity dried up with the 2008 financial meltdown.

For years the Chinese have been lending back their profits to western buyers, —buying mostly US Treasury securities—, which substantially undervalued the yuan and allowed western consumers easy access to credit, so they could continue purchasing low priced exports from China.

But a couple of years ago, the People’s Bank of China began to diversify its investments into commodities, oil wells and mines, compelling Ben Bernanke to step in to buy US government debt, to maintain the low interest rate stimulus.

It’s also becoming clear that the PBOC is beginning to lose ground in its battle against inflation, due to the rising costs of commodities and labor.

The sustained high growth of the Chinese economy is generating pockets of labor shortage —employers have raised salaries as much as 30% to keep workers with skills in high demand.

Although there’s still a long ways to go, the moves in opposite directions to an equilibrium of the labor costs —rising in China, and deteriorating salaries in the west— is rapidly closing the wage gap between East and West.

In other words, China may still be very attractive for its large consumer market potential, but it is rapidly losing its cheap labor appeal to investors.

3. Helicopter Ben has the dollar spout wide open.


Ben Bernanke, Federal Reserve Chairman, Courtesy of Wikipedia

Ben Bernanke, the Fed Chairman, has repeatedly demonstrated his willingness to quantitatively ease the economy out of the recession.

Nothing wrong with that, as a matter of fact, I get the feeling that a lot of people never realized the trouble they’d be in if he hadn’t eased, and continue to ease, the liquidity of the economy.

But the public’s sentiment has changed. The Republicans are vehemently opposing any increase in deficit spending, and I think they have the public’s good ear.

Trouble is, the US consumer is not yet out of the rut.

4. Oil is scarce.

Have you asked yourself why we’re getting our oil from Nigeria, Venezuela, Iraq, Iran, Libya..? Should I continue? If we’re getting our oil from all these distant or unfriendly places, it’s obvious that oil must be scarce.

In normal conditions, when the price of oil is too high, the economy slows down bringing down the price of oil with it, because of the drop in the oil demand.

But with the turmoil in the Arab world, the supply of oil could very well fall further than its demand. In this situation, you might see oil prices taking off non affected by a tanking economy. Not a pretty sight.

You have to recognize that the immediate future looks bleak.

Even if the Chinese inflation discourages investments in China back to the west, it’s tails you lose, heads you lose.

Defusing the Chinese inflation will slow its economy, dragging the rest of the world economies with it. China will also export its inflation to the west through its products’ prices.

To make matters worse, expected cutbacks in US government spending and probable oil shocks would add insult to injury.

Technology anyone?

Related articles

• The China Effect (time.com)
• Number of the Week: The ‘China Price’ Also Rises (blogs.wsj.com)
• “Zhou Pledges More Tightening; Moody’s downgrades China Property; Clouds Over Global Economy; Yuan Reserve Currency Hype” and related posts (globaleconomicanalysis.blogspot.com)
• China’s economy slows slightly, inflation hits 32-month high (latimesblogs.latimes.com)

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It's difficult to discipline an employee.© Drazen Vukelic

Have you ever needed to discipline an employee who disobeyed your rules, or the company’s?

It’s always a difficult situation, where it’s not enough to know the local area’s labor laws, safety and other regulations.

Discipline is further complicated by the fact that we may never be able to write down all the rules in a company manual, because it’s simply overwhelming to consider all the potential situations.

To add fuel to the fire, managers are unaware that they have a cultural bias. They have adopted a set of rules —which are transparent to them— of what they deem appropriate behavior throughout their interaction with others, since early childhood.

Hence, the way to discipline an employee falls into a fuzzy, but sensitive area.

So, what should you do to keep the discipline of your group within a healthy environment?

1. If it’s a crime, call 911.

If someone pulls out a weapon, or physically threatens anybody within the company’s premises, call 911 and have security evacuate all personnel from the area. It seems extreme, but it’s happened in High-schools.

Your first and foremost responsibility is the health of those at risk.

I’ve lived through a couple of fistfights. In this case, I’ve defused the explosive situation by immediately sending both home —suspended, till further evaluation.

2. You must be Fair.

You must pay special attention not to reflect in your judgement any negative cultural bias, or hidden agenda.

The best way to sustain the productivity of your operation —which is the main objective of disciplining an employee— is to think like a judge. Above all, you must be fair, asking lots of questions and acting upon specific facts, while avoiding rumors and innuendo.

The guy is innocent unless proven guilty.

If you’re perceived as unfair, you’re trustworthiness will plummet.

As a consequence, the group will hide bad news and will feel discouraged to openly criticize your ideas for fear of retaliation. This is a dangerous situation for the company, not only because it reduces productivity, but because it also drives the company down a path where it may not be able to steer itself away from colliding with icebergs on time.

3. Don’t forget that you’re correcting a behavior.

You’re trying to correct a behavior. It’s not about getting even through punishment.

Once you’ve gathered your facts, from what you saw, and from what others witnessed —preferably, in writing— call the employee and his union’s representative to a meeting to discuss the event.

In this meeting you will submit the facts —including his past record of offenses— and ask the employee a few more questions:

• Why did you do it?

He could have a good explanation for what he did. At least, you’ll find out his motives.

• Knowing that this behavior had a specific negative impact on our company, would you repeat this behavior?

He could state that he hadn’t thought about the impact of his action. He could show remorse, and promise not to repeat the situation. Or, he could care less.

• Finally, what would you have me do to correct your behavior?

Again, I stress that the purpose of the meeting is to correct the behavior. If you see a sincere intention to mend the behavior, take his offer, even if you feel he’s getting away with murder.

Remember that compassion has its rewards.

In this case, hopefully, the employee will mend his ways and always be grateful of your leniency. And, if he doesn’t live his promise, he knows it will be much tougher to convince you and the union representative to be lenient on the next occasion.

4. Keep good records.

It’s important to keep written records of these meetings, and memos to the employee. You will use them in disciplinary meetings, as shown. And, they may be necessary to justify laying off an untrustworthy employee.

To sum up:

Disciplining is about correcting behaviors, with the main purpose of improving productivity.

Being lenient, or compassionate, will help you build a reputation within your group of employees, which will allow you to ask, now and then, a display of extraordinary efforts from this happier group.

Related articles

• Best Practices: Keeping Documentation of Employee Disciplinary Actions (brighthub.com)

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Sir Winston Churchill.
Courtesy of Wikipedia.

Have you noticed how easy it is for some guys to influence others? Why are people so willing to give them a red carpet treatment?

Could it be that it’s simply because they have built a solid reputation for themselves?

It’s obvious that a high ground position commands an advantage: trust.

If you’ve gained the top of the hill, people naturally feel more inclined to trust you because they respect your achievement.

Let’s take a look at a couple of ways to help you gain high ground trust, or a reputation:

1. The most obvious way to get ahead is to become an expert.

It doesn’t matter if you’re a scientist or a prize fighter. In order to become a recognized guru in your line of work, you have to dig deeper than the rest. So much so, that you should be digging at the edges of your subject, or breaking new ground.

It also helps to narrow your focus, or to find your niche at the intersection of other subjects.

For instance, I’ve focused my blogging to cover the three subjects I consider essential to safely navigate the white water rafting waters of the 21st century work environment: to know one’s self purpose, how to network with others, and the world economy.

If you’re going to navigate turbulent waters, you need to be able to tap your full potential, you also need the safety net of a well nourished network, and, you must have a clear view to take advantage of the opportunities that are out there.

2. You must be recognized by your compassion.

In other words, you must achieve a moral high ground because you help others.

Winston Churchill is one of my favorite subjects because of the bizarre way of advancing his political career: at an early age he decides to become a hero, in order to gain notoriety.

The young Churchill realized that by offering his life to others —in the pursuit of their safety—, people would pay him back in kind by voting him into office.

Of course, there are many other notable examples: Mother Theresa, Mahatma Gandhi, the Dalai Lama and others. As well as, less known well meaning average Joes and Janes.



Mahatma Gandhi.

Gandhi once said:

“When I despair, I remember that all through history the ways of truth and love have always won. There have been tyrants, and murderers, and for a time they can seem invincible, but in the end they always fall. Think of it–always.”

Do you see the reference to compassion in his words?

We all have a basic need to do good to others.
So, get involved with your community’s problems. Give a hand, that I’m sure you’ll not only grow in the eyes of others, but, your heart will feel better.

Finally, I recommend plain honesty.
It may appear cheesy, but, to recognize that you have made a mistake —which no one but you may be aware of— to your wife, children, client or company, takes a lot of courage. It may be tough to face the consequences, but over time, people will learn to respect and trust you. And, most importantly, you will respect yourself.

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Man getting into his fours © Murat Giray Kaya

We’ve all had to deliver a major presentation to an important client, or from the podium to a crowd, which wrecked havoc on our nerves.

In this post, we’ll go over a few ideas to help you wing it.

To begin with, would you crawl on your four to ask for acceptance? Of course, not. Then, doesn’t it strike you as odd that somewhere in your mind you have been willing to do so?

How you view uncertainty has the biggest bearing on this behavior.
Uncertainty reflects the unyielding fact that everything around us is changing.

You’re worrying too much because you probably expect to stumble while delivering your presentation —either you expect your voice to falter, or that you’ll be asked a question for which you’re not prepared…

To help you keep your cool or your calm under pressure, let’s go over the following reality checks to get a healthy perspective on uncertainty:

1. We’re all going to die anyway.

If you’re overwhelmed by negative feelings about the uncertainty of your future, you might as well stockpile an atomic bomb nuclear shelter in the basement of your house, and never leave home.

Or, you might face reality, and say “what the f…, we’re all screwed anyhow.” In not so many eloquent words, Heidegger also stated that in order to feel free, we must reconcile ourselves with the inevitability of death (Steve Jobs felt the same way).

Or, like shitmydadsays “Nervous? In 5 billion years the sun will burn out and nothing you did will matter. Feel better?”

2. Life is an adventure.

Or, as Forrest Gump’s mom used to say: “Life is like a box of chocolates. You never know what you’re gonna get.”

If you view your life as an adventure, where the fun comes from overcoming obstacles, you’ll enjoy the challenges of conquering any white river rafting presentation.

Think of the adrenaline rush as your body readying you for action. You know it’s important. So, your body needs to be in top shape to deliver well.

3. Learning and practice help.

My dear wife teaches the Lamaze method. In essence, by having mothers (or you) practice and learn more about their future delivery, they gain the necessary confidence in themselves —and lose their fears— to perform much better during their delivery.

I also thoroughly study the subject, and visit many potential detours from the main delivery idea. Then, I prepare a short list containing the main pointers.

Along the way, I’ve also learned a few (bodily) tips, which I’m sure you can put to good use:

• Speak loud enough so the guy in the last row can hear you. An assertive voice commands authority, and you’re sure to erase the question mark grin off the guy sitting furthest.
• Scan your audience, stopping along the way, to talk to them one by one. Ask questions or take polls. If you engage them, you will connect and they will pay more attention to you.
• Move around. People get bored if you stay frozen on a podium.
• Show a confident body posture. Do what’s cool for the occasion. Never a boring cover sells books.
• Don’t rush it. A slow delivery reflects confidence, and maybe a few in your audience will be fortunate enough to be able to understand what you’re saying.
• Slow and deep breathing silences can also help you keep your calm (and arrest a panic attack).
4. Show your joy in living.

In previous posts (about happiness, success and enthusiasm) we learned the benefits of starting our chores in a happier frame of mind, —which may well boost performance by up to 50%. So, try to start the day by having a good time.

Enjoy an ice cream, or a chocolate bar… Listen to your favorite Ipod music. Take a stroll. Shop for nice clothes to wear to your presentation. Find some new jokes. It can’t be that difficult.

Finally, remember to bring to your presentation a cherished memory of a happy moment, to evoke when you feel insecure. I have a happy memory which works wonders whenever I serve in tennis.

5. Meditate each morning 10 minutes.

Meditation, as we’ve seen before, is an excellent exercise proven to improve the control of your emotions. Take 10 minutes every morning to concentrate on your breathing. Remember, it’s like a deep dive, be kind to yourself, your thoughts are the ever present little waves on the surface of the sea.

6. Your vulnerability is welcome.

People know you’re not perfect. As a matter of fact, they prefer people to robots. Have a laugh at your mistakes. Errors allow us to find new creative inroads. They also make us human. Showing that you’re vulnerable is a sure way to bring others closer to you.

It’s sad to see how feeling ashamed, where you attempt to hide a weakness, ends with the exact opposite effect, distancing yourself from the people you’re trying to be close to. Showing vulnerability brings us all closer to each other.

7. Prepare a Tick-Tack list.

I learned this great simple method from Michael Michalko. Prepare a list with two columns with headers Tick and Tack. Under the Tick header you jot down all the negatives that you envision may occur during your presentation. Then, under the Tack header you try to find and write down the reasons why the Ticks do not make sense.

Downloading your worries to a list to mull over them is a great exercise. Realizing that these Ticks are not solid issues will generate a contradiction, which will dissolve your previous negative thoughts. This way, you gain the confidence you need to face your audience.

I’ve always liked this quote from Mark Twain because it opens many other doors:

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”

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It’s a good one, that’s why it’s here. I didn’t want you to miss it.

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Girl's mismatching socks
Courtesy of littlemismatched.com

Disruptive thinking is what we should be doing at the top of our game, when we’re full of energy and optimism. It’s a unique way to analyze your possibilities. It opens you’re thinking to create new possibilities (products or product lines) —quite fascinating.

Unfortunately, there are many people who are unwittingly immersed in emotional spaces which hold them back. Resentment, resignation, grief, including tradition may be some of these hidden culprits.

For instance, in our culture it’s traditionally more acceptable for women to cry. On the other hand, men are freer to express their anger. So, it’s not uncommon to find in our society women who have a problem answering back in an upsetting discussion, and instead cry about it.

I’m fascinated by the fact that these negative emotional barriers are transparent to their tenants. They do not see what’s holding them back.

Let’s fast forward and imagine that we’re free of these emotional iron balls, and that we have at our disposal our full energy potential.

It’s interesting to acknowledge that in this very positive and optimistic mood, we are still required to exert an effort to visualize our possibilities. It’s not a free ride to see the wide spectrum of our possibilities.

Disruptive thinking is the extreme sport in visualizing your possibilities. It’s an exercise that triggers innovation. It’s not about making the same thing incrementally better, but, doing it differently. It presses you to find new ways or to stretch yourself into new subsets of what you have been doing.

In essence, you ask yourself what would happen if you did the opposite of what you are doing, of the accepted conventions or the status quo, and also ask which market values this innovation.

Think of the guy who came up with the idea of selling “mismatched socks.” He found this disruptive idea, and the 12-14 year old girl market that values this product.

To get an explanation from the horse’s mouth, I suggest you view this Luke William video, professor at NYU and author of the book Disrupt.

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