101 Things I Learned in Business School

 “101 Things I Learned in Business School” is a book by Michael W. Preis and Matthew Frederick. Preis is a business professor at the University of Illinois and a graduate of Harvard Business School. Frederick is an architect and creator of the 101 Things I Learned series.
  
There are many books offering leadership in 12 lessons, an MBA in 10 days or the 100 secrets of motivation. These books are easy introductions to the discipline of business management and “101 Things I Learned in Business School” is one of them.  It is a part of a set that also includes topics in the fields of architecture, fashion and film. Most of these easy introductory books have something in common as they share some important insights. I would like to point out a few of the business insights in the book.
 Functional silos can be dysfunctional. We organize companies in the forms of departments and these departments work independently; however, the company is a whole. An organization is like the human body; all organs need to cooperate rather than work independently in order to achieve a healthy existence.
 There are three ways to grow a business: increase market share, grow with the market and expand into a new market. A lot of companies struggle to grow in an existing market but sometimes investing in a new fast-growing market is much easier.
 Ice hockey player Wayne Gretzky once said, “I skate to where the puck is going to be, not where it has been.” A common mistake is managing a company like driving a car by always looking at the side mirrors. Organizations are always faced with an uncertain future so we have to focus on the future, rather than examining the past.
 Cannibalize your own sales. If you have winning products, you are lucky. But a successful product provides a comfort zone for a company, but comfort zones in any company are a hunting ground for competitors. So it is best to develop better products than our existing products and kill our products before somebody else does.
 Free can be part of a successful business model. “Free” has been a marketing strategy for a very long time, but with the launch of the Internet “free” became a revolution. Any company should consider providing some free services or products. One of the most successful examples of the “free” strategy is Google. Google’s free service created a giant in the space of 10 years.
 Bill Gates once said, “Your most unhappy customers are your greatest source of learning.” This is a way of focusing on the customer because when you listen to complaints by customers you can easily find ideas for improvement and sometimes new product development.
 Good, fast or cheap -- pick two. You can also refer to these as a quality, time and cost triangle. These three are interconnected. If you want high quality in a short period of time, you should be ready to pay the cost. If you want low cost in a short period of time, you should be ready to compromise on quality.
 Sacrifice the trivial few for the vital many. The Pareto Principle says that 20 percent of effort is usually responsible for 80 percent of results. This suggests that businesses are best served by giving the greatest attention to the 20 percent of customers who account for 80 percent of sales and solving the 20 percent of issues that will address 80 percent of problems.
This book provides a lot of insights for every body in a quick read.

Stumbling on Happiness

“Stumbling on Happiness” is a book by Harvard psychologist Daniel Gilbert. The book questions happiness.
  
He starts with the problems of perception, because any attempt to be happy includes the perception of happiness. He explains numerous psychological illusions to prove that our perception process has serious troubles.
Dr. Gilbert refers to various studies and experiments and leads us to three conclusions. First, our imagination tends to add and remove details, but people do not realize that key details may be fabricated or missing from the imagined scenario. Second, imagined futures (and pasts) are more like the present than they actually will be (or were). Third, our imagination fails to realize that things will feel differently once they actually happen -- most notably, the psychological immune system will make bad things feel not so bad as they are imagined to feel.
According to Gilbert, happiness is somewhere in the future and we are trying to create that future. This thinking about the future is one of the distinctive features of human beings. People try to predict the future. The problem, however, is that most of the time the future is very different from the prediction. Some people try to refrain from unsuccessful estimations and focus on the present, and to benefit from it. However, the conditions of “now” do not prevail so we have to prepare ourselves for the future.
The definition of happiness differs from person to person; it is a subjective feeling. It is impossible to compare two different persons’ level of happiness. Apart from comparing two different persons’ happiness, it is very difficult to make a comparison of the present happiness to his past happiness. Happiness is not quantifiable. Even if it is not quantifiable, we may try to measure it by accepting one premise: Measurement will not be accurate.
One of the problems of imagination is its speed. It works so quickly, quietly and effectively that we are insufficiently skeptical of its products. We assume that what we perceive is the truth. We fill in the missing bits of our perceptions with what we think should be there. We only store important pieces of data, and structure the other bits through our imagination. By the way, imagination and reality mix in our mind, but we consider that it is 100 percent truth.
Another problem of perception is giving too much importance to existing data. The data which is not available for the future might be more important than the available data. However, people tend to pay more attention to available data. This approach leads to disappointment for many people.
One of Gilbert’s important points is about how we see the past and the future. How we experience the present directly affects how we remember the past and how we imagine the future. The imagination of the past and the future differs when you are hungry from when you are full. In order to focus on a possible future it is best to block our relationship with the present because the experience of the present filters the clear imagination of the future. It is difficult to remember a particular melody while listening to another.
One remarkable point from Dr. Gilbert is about how we perceive the future present. If it is likely to be bad, we have a tendency to see it from an optimistic point of view. This can be considered our psychological immune system. We try to support our rationalization with facts. The sampling we use might contradict reality, but it gives us hope.

The Evolution of Revolutions

“The Evolution of Revolutions: How We Create, Shape, and React to Change” is a book by Patrick J. Howie.
  
A well-known academician from Harvard Business School, Howie explores the idea of innovation in his book.
According to Howie, creative destruction is a process by which new ideas, businesses and industries emerge and therefore lead to the downfall of traditional ideas, businesses, and industries. It is a revolutionary process. A revolution is not just a political event, for revolutions occur in all areas, whether in business, politics or science. The revolutionary process, too, is the same for all areas. Revolutions represent a long process -- from the initial innovation to the dramatic revolutionary period, through the long post-revolutionary adjustment. At its core, this book is about understanding the process of innovation and how a new idea, product, or service spreads throughout a social system to cause a revolution.
Howie examines three major revolutions: the democratic revolution that began with the American Revolution, the relativity revolution that took hold through Albert Einstein’s theories and the rapid emergence of the World Wide Web as the dominant social force of our time.
The idea that each of these revolutions was the work of a single act of genius or reflected a dramatic leap forward thinking is an unfortunate oversimplification. Each of these revolutions evolved over decades and represented the culmination of a social process. In addition, the revolutionary moment, so often mythicized, is an intermediate step in the process, as the revolution continues well beyond that moment.
According to the author, in any industry there are today multiple revolutions occurring. Granted, some are more significant than others, but innovation and change is occurring constantly. Creating successful innovations is actually very different from merely creating innovations, as the former requires acceptance by a target audience. A critical thesis of this book is that in order for an innovation to successfully cause a revolution, it must pass through three stages: resistance, clarification and elaboration. Failure to pass through each of these stages is what separates a fad from a true revolution.
That new innovations are met with resistance is hardly a novel idea, but the notion that resistance leads to further refinements of the innovation is an often misunderstood element in the transition from innovation to revolution. Despite the efforts of even the smartest people, new innovations almost always have “bugs” that need to be sorted out. This is one reason why it is natural to resist an idea when for the first time it comes to your mind, since it is highly likely there is some problem with it that has yet to be detected. The ability to successfully improve the innovation or, in the rare case when the innovation is correct out of the gate, the ability to provide sufficient evidence that the innovation is fundamentally sound is critical to transforming an innovation into a revolution, which is also called the clarification stage.
The author writes that the ideas behind “The Evolution of Revolutions” follow a path strikingly similar to the book’s core thesis: that a revolution is the result of long developmental evolution, a revolutionary moment, then a long period of further evolution that culminates in a synthesis of the innovation process.

Little Bets

 Peter Sims has a reputation in the field of entrepreneurship and innovation, and in his book “Little Bets: How Breakthrough Ideas Emerge from Small Discoveries” he explores the small steps of big successes.
  
This book is based on the proposition that “we can make a lot of little bets and be creative in identifying possibilities that build up to great outcomes. At the core of this experimental approach, little bets are concrete actions taken to discover, test and develop ideas that are achievable and affordable,” as the author puts it. The little bets are only possibilities in the beginning but they become refined over time. They create incomparable opportunities and gradually open the gates to big achievements. However, we don’t know which little bet or which attempt will bring success; the number of little bets is definitive in creating ultimate results. This approach is very useful to unlock creative ideas.
Popular opinion may suggest that only certain people are brilliant creators. The secret behind their successes is generally considered to be their creative minds. However, Sims suggests that “the tremendous value of attaining innovative and creative outcomes through an experimental approach has long been neglected. … When uncertainty replaces certainty or when we lack insight, experience or expertise about problems, experimental innovation is a far better approach.” Most successful entrepreneurs, especially those who start their businesses with limited capital, operate in this experimental way when trying new ideas. As the story goes, Mark Zuckerberg’s Facebook story started after an argument with his girlfriend. He started Facemash and afterwards he was hired as a programmer, finally he started his own business, Facebook.
Michael Jordan’s elder brother Larry Jordan was an unbeatable figure for Michael Jordan. When the two brothers played basketball, Larry always got the better of Michael. Michael had to work hard to defeat his older brother in basketball. The amount of time and effort he put into beating his brother in basketball enabled him to become one of the best basketball players of all times. The little bet to bet better than his brother led to Michael Jordan’s success.
Google founders Larry Page and Sergey Brin’s initial goal was to solve a small problem: How to prioritize library searches online. Finding the solution in a specific algorithm, they used this algorithm not only for library searches but for general search engines on the Internet and so they created Google.
Peter Sims provides “a set of creative methodologies for solving problems and generating ideas that is based on building up solutions, rather than starting with the answer.”
Experiment, Play, Immerse, Define, Reorient and Iterate are the main actions of little bets approach. The book describes these actions as:
“-- Experiment: Learn by doing. Fail quickly to learn fast. Develop experiments and prototypes to gather insights, identify problems, and build up to creative ideas, like Beethoven did in order to discover new musical styles and forms.
-- Play: A playful, improvisational, and humorous atmosphere quiets our inhibitions when ideas are incubating or newly hatched, and prevents creative ideas from being snuffed out or prematurely judged.
-- Immerse: Take time to get out into the world to gather fresh ideas and insights, in order to understand deeper human motivations and desires, and absorb how things work from the ground up.
-- Define: Use insights gathered throughout the process to define specific problems and needs before solving them, just as the Google founders did when they realized that their library search algorithm could address a much larger problem.
-- Reorient: Be flexible in pursuit of larger goals and aspirations, making good use of small wins to make necessary pivots and chart the course to completion.
-- Iterate: Repeat, refine, and test frequently armed with better insights, information, and assumptions as time goes on.”
“Little Bets: How Breakthrough Ideas Emerge from Small Discoveries” is a very action provoking book, making readers to take small initiatives in their lives.

Rush

“Rush: Why You Need and Love the Rat Race” is a thought-provoking book by Todd G. Buchholz.
  
In this book, Buchholz claims that competition itself -- although sloppy, risky, and tense -- can bring us happiness. It is the very pursuit of love, new knowledge, wealth, and status that delivers a “rush,” lights up our brains, releases dopamine, and ignites our passion. Furthermore, he argues that the cause and effect relationship between competition and happiness is hardwired into every one of us.
Throughout the book, the “rat race” metaphor is used and questioned. The term “rat race” is used in psychology, to describe an endless, self-defeating or pointless pursuit. It conjures up the image of the futile efforts of a lab rat to escape a maze, or running in a wheel. In an analogy to the modern city, many rats in a single maze expend a lot of effort running around, but ultimately achieve nothing meaningful, either collectively or individually. “Rat race” is a often used to describe work, particularly excessive work; in general terms, if one works too much, one is running a rat race. It carries the implication that many people see work as a seemingly endless pursuit with little reward or purpose. So, in general, the rat race is something negative, to be avoided. Todd G. Buchholz definitely opposes this view, and he tries to prove why the “rat race” is necessary, backing up this thesis with scientific research.
According to his book, neuroscientists report that when a person begins to take risks, whether it’s gambling or making a business offer, his left prefrontal cortex lights up, signaling a natural high. Alpha waves and oxygenated blood surge to brain. Sitting alone in a small tent in the countryside does not yield the same effects. Likewise, our competitive urges cannot be separated from our desire to learn more. The author believes that competition fosters learning. A contented person stops learning, but a person working against competition continues learning.
And old Latin phrase describes man’s struggle thus: “homo homini lupus” (“man is wolf to man”). Wolves do cooperate, in nursing their young or hunting a deer. They cooperate because they are engaged in competition with nature. Likewise, early man was often running away from predators or other dangers. Competition against predators and the unforgiving planet forced people to cooperate with one another. Competition begets cooperation. According to the author of this book, “Competition is the root of our success,” not a path to misery.
The author uses the analogy of Eden in his book to explain the benefits of competition. Once Adam and Eve left Eden, apples no longer fell at our feet. We had to plant and reap. Or take a six a.m. train to work. We seek success because it validates our lives, and gives us a feeling that we are worth loving, and that we were worth the love and effort our parents lavished on us. Money has a place in our lives, but money is simply a convenient way for society to arrange economic relations. If everyone were paid the same amount, if everyone lived in the same house, our minds would receive no signal that we are expending our energy in a prudent or productive way. The dollars we gain from work spark an aboriginal sentiment that excites the vital juices that keep our hearts beating and the oxygen flowing to our brains. They signal to us that we will disappear from the world stage due to natural competition.
Success is not always defined by money. Many talented people deliberately choose careers that do not yield bulging paychecks; for example, professors, ministers, chefs, and playwrights. Yet they may consider themselves enormously successful. If they feel successful their happiness quotient will likely exceed that of someone who earns more money but considers himself unsuccessful.
Buchholz comes to some conclusions: First, any system involving more than a few people will be competitive after a few years. Second, we can not return to Eden, because human beings are no longer suited for paradise. Third, people are driven to work and succeed, because work makes them feel better about themselves, and succeeding at work validates their lives and gives them a greater chance of perpetuating their genes. Finally, without competitive urges, people would die earlier.

The Fair Society

 

 Peter Corning looks for an idealistic vision for society in his book “The Fair Society: The Science of Human Nature and the Pursuit of Social Justice.”
  
 In his book, he proposes a biosocial contract, so called because it is grounded in a biological perspective on human nature and the human condition. An organized human society can be characterized as being, in essence, a collective survival enterprise that is concerned primarily with the ongoing survival and reproductive needs of its members. A new biosocial contract must strive to achieve a fair society.
There are three precepts for fairness -- equality, equity (merit) and reciprocity -- that must be combined into a package and balanced in order to create a society that is relatively fair and just to everyone in terms of both benefits and costs. Corning believes that capitalism or socialism can never be considered fair, even in theory. He believes in a fair society based on these three principles.
What is fairness? And why do we care? The dictionaries define fairness as “equitable, honest, impartial dealings” (Oxford English Dictionary), “freedom from self interest, prejudice or favoritism” (Merriam-Webster), “free from bias, dishonesty or injustice” (dictionary.com).
The problem, of course, is deciding what is equitable, free from bias, impartial and so forth in any given situation. In short, fairness is not some sort of cosmic absolute or an open moral fact. There are very often two or more sides to any fairness issue, and sometimes a disinterested party is needed. Some of the hardest fairness calls in real-life situations are cases where our traditional rules of thumb do not work -- when equal shares are not really appropriate and “equity” (or proportionate shares) is really the fairest way.
Consider the timeless phrase that every parent has heard so many times, “It’s not fair.” Is it fair to give a 5-year-old child and a teenager the same allowance? On the other hand, if there is a birthday party for your 15 year old and her 5-year-old brother is invited so he will not feel left out, is it appropriate to give him an equal-sized portion of the cake? A wise parent will not attempt to be “equitable” in this case. If the cake is big enough, one option is to let the guests choose as much or as little as they like. In effect, a free choice, whenever possible, limits our tendency to make comparisons and to become envious and resentful.
As mentioned before, there are there aspects of fairness -- equality, equity (merit) and reciprocity.
Equality, or “equal shares,” is the most fundamental principle of substantive fairness and the easiest to administer. The idea of equal shares is also in accordance with a strong human desire to be treated equally. Equality is important in any cooperative team effort, where everyone contributes, though perhaps in different ways, to the achievement of a collective goal.
Corning prefers to focus on merit when the subject is fairness. He believes that merit, which implies that a reward, or punishment, is earned by the recipient and is a result of his or her actions and circumstances. In capitalist economic theory, merit is closely associated with talent, initiative, private investment, risk taking, hard work and, of course, achievement.
Reciprocity is the third but no less important domain of fairness. When a disciple of Confucius asked him for a single word to describe the basic principle of social life, he is reputed to have answered “reciprocity.” Corning gives a few more examples to emphasize the importance of reciprocity in global world history. He quotes from the Prophet Muhammad, who said, “The noblest religion is this, that thou should like for others what thou like for thyself; and what thou feel as painful for thyself, hold as painful for all others, too.” He also quotes from the Bible to underline the importance of reciprocity: “And as you would that men should do to you, do you also to them likewise.” (Luke 6:31, quoting Jesus).
Finally, Corning claims, a fair society can only be achieved by collective action. No individual, not even the greatest and most inspiring leader, can be anything more than an instrument for accomplishing our common goals. Corning, referring to US President Barack Obama’s presidential campaign, underlines the importance of millions of individual donors. Collectively, their actions helped determine the outcome.

The X and Y of Buy

“The X and Y of Buy, Sell More and Market Better by Knowing How the Sexes Shop” is a recent book by Elizabeth Pace. She makes a funny start in her book: “Men buy.
Women shop and then purchase 80 percent of everything.” She assumes that men and women are different by design. She contrasts the buying styles of the two sexes. In the famous department store, Neiman Marcus, the business suit section is right at the entrance; thus, any man can easily find the right suit in seconds. However, a lady that tries to find a dress must be prepared for some exercise. She has to enter to the store from the same door; pass the men’s section, make a left, then pass cosmetics, go through women’s bags and shoes to reach the escalator and finally find the spot for women’s dresses. A man would never make a similar effort to buy a business suit. They want to find the target easily and in a short time; however, women must spend time and struggle to find the target. If you show a woman something that she wants immediately – even if it is the exact piece that she is looking for -- she cannot buy it. It is like giving birth to a baby. Without struggling and a certain amount of time, a woman cannot buy. They have to have a rich emotional experience while shopping. Elizabeth Pace is a specialist working on shopping behaviors on a scientific level. She researched consumers by using fMRG (functional magnetic resonance imaging). She has a deep knowledge of the male and female brain and how they function while shopping. In the first chapter she describes the key differences between male and female brains. The male brain is just like a file cabinet. There are many files in the brain; and each file is stored in a special section; and there is no connection between separate files. A finance file is totally separate from the file about his kid. This feature helps men to focus on a single subject at a time. There are two lobes in a brain, and men use one of the lobes for one issue. A man can hold his emotions separate from a business problem; thus, he can act in a rational way. On the contrary, a female brain is like a table. Files are available in groups that are connected to each other. In the female brain multiple thoughts take place at the same time, and this helps women to see the connections and interactions of things. There is 15 percent more blood flow in the female brain than in the male brain. The corpus callosum, which connects the two brain lobes, is 23 percent bigger in female brains. So, they can easily correlate different aspects of their lives. Elizabeth Pace gives a funny example from her personal live to illustrate how male and female brains work. In 1993 she decided to buy a car. She went to a dealer, and they started to examine a BMW. They were looking for a comfortable car, which they mentioned to the dealer. The dealer started to show a car’s engine and explain the technical aspects of the car. Her husband was impressed by the qualities of the car. The car looked really charming. Her husband said: “We found our car. This is the ultimate driving machine.” After this sentence Elisabeth asked, “Where is the coffee cup holder?” Before the dealer, her husband answered “This is a car, not a restaurant.” However, there was no coffee cup holder, and finally she bought a Toyota with a coffee cup holder. Not only her personal experiences but also business cases appear in the book. Elisabeth Pace’s book might help marketing people because she uncovers the secrets of male and female buying behaviors.

Changing Minds

Howard Gardner is one of the most influential researchers of the 20th century. He invented the concept of multiple intelligences and published many books on intelligence and geniuses, from Mozart to Einstein.
In “Changing Minds” he examines the process of social conviction and change. In most parts of the books, he relays the experiences of people who are able to change people’s minds as leaders. He presents seven “levers” for changing minds and discusses their application at various levels of mind change. The first one is reason. Reasoning is one of the most important persuaders. By reasoning, one can classify things to systematically analyze them or deploy analogies to develop models. The second lever is research. One of the best mind changers is data. By using relevant data, it is easy to attract the attention of people. The third lever is resonance. There are some messages or theories that resonate with people. If people can see the theory or the message in their own life, the message becomes significant. The fourth lever is representational re-description. Authors or politicians may re-describe what is happening in a completely new way and people can understand and act on this re-description. The fifth lever is resources and rewards. Sometimes resources can change people’s minds. If you provide busses, people will use busses to get somewhere else. Resources can move people in a certain way. Of course, rewards can also change people’s minds. To receive a reward people can change their behavior and the mindset. The sixth lever is real world events. Some leaders became leaders following real world events. For example the Falkland Islands crisis helped Margaret Thatcher convince British society of her determination. The seventh lever is the last lever and it is “resistance.” Resistance is slowing down change. People do not want to change easily. However, any resistance can help the change movement because it crystallizes an idea. The opponents of an idea strengthen the idea without being aware of it. Gardner suggests the following as the content of the mind: ideas, concepts, stories, theories and skills. Four of these aspects are useful in changing minds. When we denote all four-legged furry household pets that bark as dogs, we are revealing our concept of canines. People can change minds by replacing an old concept with a new one. Stories are narratives that describe events that unfold over time. Stories consist of a main character, ongoing activities geared toward a goal, a crisis and a resolution, or at least an attempt at resolution. Most political leaders or business leaders have stories; their lives embody the stories. Their stories carry a change message, and their lives support this message as evidence. A commander who wants his soldiers to be brave, fights in the front line and in so doing supports his message. Theories are relatively formal explanations of processes in the world. A theory takes the form “X has occurred because of A, B, C.” From an early age, we develop theories about the world. A scientist presents a new theory by altering an old one. Scientists, instead of telling stories, explain a theory. Albert Einstein, for instance, was not a storyteller; he was a theorist. Skills consist of procedures that individuals know how to carry out whether or not they choose to -- or even can -- put them into words. Skills will range from the mundane – like catching a ball -- to the complex -- playing a Bach sonata on the violin or solving mathematical equations. Jim Hines was the first man to break the 10-second barrier in the 10 meter, recording the first sub-10-second electronically timed run to win the 100-meter race at the 1968 Olympics. When Hines broke the record, he changed our understanding of the limits of human body. In his book, Gardner gives detailed mind changing stories of leaders like Gandhi, Margaret Thatcher and Bill Clinton. Not only success stories, but also stories of disappointment are mentioned in the book.

Predictably Irrational

“Predictably Irrational: The Hidden Forces that Shape Our Decisions” is a 2008 book by Dan Ariely in which he challenges readers’ assumptions that people make decisions based on rational thought. Ariely discusses many modes of thinking and situations that may refute the traditional rational choice theory.
Ariely describes the ways in which people frequently perceive their habitats in terms of their relations with those they live with. He gives a funny example of subscription offers of The Economist magazine. Subscription to economist.com costs $59, subscription to the hard copy of the journal costs $125, and subscription to both the web magazine and hard copy version costs $125. He carried out an experiment in his class at the Massachusetts Institute of Technology (MIT) and made the same offer of The Economist magazine. Eighty-four students preferred to buy the web and hard copy versions together, whereas 16 preferred to buy the web version only. Nobody chose to buy only hard copy magazine subscription. Actually there is a trap here since there is no reason to offer the hard copy magazine alone because everybody prefers to buy the web version and hard copy version at the same price. However, the hard copy alone offer provides a reference point for the potential customer and the customer immediately figures out that the web version plus hard copy journal offer is better. In another experiment, Ariely made an offer of the web version versus web and hard copy version. With simple reasoning, in these two options everything is the same and the results would be the same 16 to 84 in favor of web and hard copy version together. However, surprisingly 68 students preferred the web version and 32 students the other offer. Why? Because we make our decisions based on references, not based on facts. Ariely is a behavioral economist, and he challenges the traditional theories of economics. In the chapter “The Fallacy of Supply and Demand,” he argues that prices are not always set by supply and demand. The methods of assigning value to an object with no previous value is susceptible to irrational pricing. Take, for example, any merchandise that is not rare and not so valuable but has been put up for sale at a very luxurious shop, say, on Fifth Avenue in Manhattan. People will perceive it as a valuable item simply because it is sold there but not somewhere else. When consumers buy a product at a certain price, they become “anchored” to that price, i.e., they associate the initial price with the same product over a period of time. An anchor price of a certain object, say a plasma television, will affect the way they perceive the value of all plasma televisions henceforth. Other prices will seem lower or higher in relation to the original anchor. In other words, decisions about future LCD television purchases become coherent after an initial price has been established in the consumer’s mind. A person’s perception of value for services rendered can also be affected by anchor prices; one can irrationally price his/her abilities or services based on an anchor price proposed. Using the concepts of anchor price and arbitrary coherence, Ariely challenges the theory of supply and demand. He states that demand, the determinant of market prices, can be easily manipulated. Furthermore, supply and demand are dependent on each other (for instance, a manufacturer’s suggested retail prices affect consumers’ willingness to pay). Finally, the author claims that the relationships between supply and demand are based on memory rather than on preferences. Ariely explains how humans react to the words “free” and “zero.” People are very sensitive to these two particular words. For example, if you offer a high quality piece of chocolate for 1 cent and a lower quality piece of chocolate for free, people prefer the free one. The “free” motivates people. Ariely in his book gives very interesting examples of human irrationality based on the strange experiments and surveys he did together with his students. It is a thought-provoking book that you might like to read.

Think Twice

Michael J. Mauboussin’s book “Think Twice: Harnessing the Power of Counterintuition” makes us think twice. A chief investment strategist and adjunct professor of finance at Columbia Business School, Mauboussin claims that intelligent people do not always make intelligent decisions.
According to the author, no one intentionally makes bad decisions. However, many decisions that initially seem reasonable might lead people to disaster. He analyzes and classifies major mental traps in decision making. In the first chapter, he tells the story of the race horse Big Brown. The horse’s past is full of victories. Big Brown won all of the races she took part in and was predicted to be the champion in her next race, as she was the favorite horse to win that race. Surprisingly she finished in last place. This story describes our tendency to consider each problem as unique rather than considering carefully the experience of others. In the history of this big race, there had been very fast and strong horses like Big Brown in the past, and only one in twenty had been the champion. But instead of focusing on the individual story of the champion, we could have looked at the past of all the others. Do you think your phone number can influence your decisions? The author carried out a simple experiment in his classes. He asked students to write the last four digits of their phone numbers and then to guess the number of doctors in New York. The students with smaller digits in their telephone numbers estimated a lower figure for the number of doctors and students with bigger digits in their telephone numbers estimated higher figures for the number of doctors. Our minds want to reduce the options at times when we should keep alternatives open. In chapter three, he questions the use of experts. An expert might be specialized and better than an ordinary person in his or her field, but the mind of non-experts is better than the expert’s mind. He gives the example of Netflix, a DVD rental company in the United States. Netflix uses an online platform to survey the opinions of Netflix members about their movies. The movies with the highest scores from clients are rented more often. No expert’s opinion is as powerful as the opinions of thousands of people. Netflix employees could function as experts, however, they would then reflect their own taste in their advice and suggestions. With a very charming example, the author also underscores the critical role of context in decision making. As much as we like to think of ourselves as objective, the behavior of those around us exerts an extraordinary influence on our decisions. He called this concept “situational awareness.” In a restaurant, if French music is playing in the background, people are likely to order French wine; however, if the music is German, people are more likely to order beer. One of the interesting points made in the books is about luck and skill. A lot of people like to explain some success or failure by luck or by skill. One of my closest friends used to believe that there is nothing called luck; for that particular friend of mine there is only hard work. And some people prefer to explain everything through luck. Mauboussin offers an alternative explanation. According to him, there are cases where luck has no importance like chess. However, there are cases like mountaineering where the probability of an avalanche falling cannot be avoided through hard work; it is by luck. Mauboussin provides very interesting examples to make the subject clearer. It is a good book that allows us to evaluate our decision-making process.

The Star Principle

Richard Koch is different from other authors in the field of business. Usually the authors are successful business people or successful consultants, but not both.
When I first read Koch in the mid-1990s, he was just a consultant and author. Today he is a millionaire. His latest book “The Star Principle: How It Can Make You Rich” is about how he became a millionaire and in it, he explains the principle and strategy behind his financial success. Koch has no original contribution to the business world, instead he always takes a well-known concept and demonstrates how to use it, as he did in his famous “80/20 Principle,” where he took the Pareto principle and showed how we could we use it in our own lives. In “The Star Principle,” he does the same, taking the famous Boston Consulting Group’s (BCG) Portfolio Diagram and showing us how we can use it in our own lives. Moreover, he explains how we can become rich and he is serious about that. According to the BCG Portfolio Diagram, there are four types of companies: cash cows, dogs, question marks and stars. Cash cows are companies with high market shares generating cash in excess of the amount needed to maintain the business. Their growth rate is slow. Dogs are the companies that generate barely enough cash to maintain the business market share. These companies are the followers in low-growth markets. Question marks are rapidly growing companies and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. Stars are the leaders in high-growth markets. They provide increasingly high returns. They are not as big as cash cows; however, they are much more profitable. Koch focuses mainly on the stars. He sees them as a major key to wealth. “What determines your success?” Koch asks, and from personal experience, answers, saying: “It’s not the ability, it’s not the hard work and it’s not people. To be successful, you should start a star business or be associated with a star business.” A star business is the leader in its market niche and that market niche is growing fast, at a rate of at least 10 percent a year. To be the leader simply means being bigger than any other firm in the niche. The size is measured by revenue. What is a niche? A niche is a separate market. It must have different customers, different products or services and a different way of doing business than the main market or other niches. By the way, any star business is a small part of the main market at the beginning; however, it grows much faster than the main players, so if you invest in one star business, it means you will have a greater return in a short period of time. If that company can protect its position, it will continue to provide higher profits in following years. This process provides compound returns. Koch invested his 1 million pounds in star businesses and in time these investments provided him with more than 100 million pounds. He insists that it is best to invest in star businesses. You may think you don’t have any money and this is just nonsense. However, Koch insists that even if you have no money and you cannot invest in a star business, you can work for one. Any fast-growing stars can pay better salaries than mature cash cows. Besides it is easier to find an opportunity to be successful and get promoted in stars, because they are smaller businesses than the cash cows. Koch provides many interesting examples, from Google to Facebook, from his own investments to other people’s investments, helping you understand which business is a star and which is a dead star.

Bounce

Matthew Syed is a three-time Men's Singles Champion at the Commonwealth Table Tennis Championships and a two-time Olympian.
With such a background in table tennis he knows much about how one becomes a champion. In his book “Bounce: How Champions are Made” he discusses the rules for success. He refers to Malcolm Gladwell's book “Outliers.” In “Outliers” there is a concept of the “10,000 hours rule.” According to the research that Gladwell refers to, all masters in the arts, sciences or sports have spent at least 10,000 hours on their craft in order to excel in their field. Mozart, Itzhak Perlman and The Beatles are the examples of the 10,000 hours rule. Syed delves deeper into the 10,000 hours rule. He starts with his autobiographical story. In 1978 his parents bought a tennis table for their house. Their house was located in an ordinary suburb of an ordinary town in southeast England. He did not know why his parents bought this table. However, this table provided a great opportunity for him to play table tennis at any time. His older brother, Andrew, used to love to play table tennis as much as Mathew did. They used to duel after school, try new spins and try out new paddles. Without knowing, they were accumulating thousands of hours of practice. The following is an excerpt from his book. “Peter Charters … was a teacher at the local primary school. … He was the coach of almost all of the after-school sporting clubs. … But Charters cared about one thing above all: table tennis. He was the nation's top coach and a senior figure in the English Table Tennis Association. … Such were his zeal, energy and dedication to table tennis that anybody who showed potential was persuaded to take his or her skills forward at the local club.” Peter Charters invited children who were interested in table tennis to Club Omega. The Omega Club was not a luxurious club for table tennis, but it provided a great opportunity for training and matches. The Syed brothers had become members of this club at Charters' invitation. They even had the keys to the club and so they could play table tennis whenever they wanted. The above personal story confirms that success depends on the time spent on one subject. Moreover, Syed claims that talent is just a myth. There is nothing like talent, there is only time dedicated to one subject. Anybody who spent time on one subject can excel in that field. To support his argument he refers to the research of Anders Ericsson. Ericson carried out a study of the renowned Music Academy of West Berlin. He divided students into three groups. The first group comprised the outstanding students: These boys and girls were expected to become international soloists. These kids were described as super-talented. The second group of students was expected to end up playing in the world's top orchestras, but not as star soloists. The final group was the least able students. They were studying to become music teachers. After long set of interviews, Ericsson found that the biographical histories of the three groups were remarkably similar. The only difference between the groups was both dramatic and unexpected: the number of hours devoted to serious practice. The best violinist had practiced an average of 10,000 hours. The second group practiced 8,000 hours. The third group practiced 6,000 hours. The difference was not dependent on talent; it was the time spent practicing that created the distinction. There are several examples in Syed's book that support the idea that success is the function of time devoted to one subject.

The Three Laws of Performance

Steve Zaffron and Dave Logan’s book “The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life” is a thought-provoking management book.
Writing an original book is a really tough job today. It looked like every possible word had been said in the field of management. In the first chapter, the authors try to persuade readers that this book is a really imaginative, new book. Both of the authors are experienced management consultants; through their management consulting projects they found out what really works in the business world. There are three laws of performance: 1.How people perform correlates to how situations occur to them; 2. How a situation occurs arises in language; and 3. Future-based language transforms how situations occur to people. What do the authors mean by “How people perform correlates to how situations occur to them?” The authors choose the word “occur” because it is more than a viewpoint; people develop a point of view based on a collective past. Our perceptions about a situation determine our behavior. If one family earns $100,000 a year, when they earn $200,000 they will feel rich, and they will probably spent more. On the other hand, if one family earns $400,000 a year, when they earn $200,000 a year, they will probably save money. Most of the time, the preceding conditions shape our mind set. If we have negative emotions toward one group of people, it will be very difficult to accept one of them as a friend. So, what we have to do is to change that perception. According to the authors, people try to change without changing their viewpoints and perceptions; however, this is a hopeless effort. There are too many efforts to change in our lives -- some in personal life, and some in corporate life. One person tries to lose weight by trying to reduce the amount he eats or by expending more energy. However, most of these efforts are fruitless because the person’s efforts are not voluntary; the person too much painful pressure on himself. Then a moment comes when he wants to stop the pain and continue to live/behave as he did in the past. The only way to change behavior is to change a perception in the mind and the heart. It is no different in the field of corporate change. Most of the time top company management wants a change and forces employees to embrace the change. If the employees don’t believe in the change, they will resist. The second law is about the language we use: How the world occurs to us is a direct function of the language we use and how we view the world around us. If someone is introduced to you as a friendly person, you listen to him with great attention; if someone is introduced to you as an offensive person, you try to protect yourself from him. Thus, how we think and act is based on linguistic description -- we don’t know that person is friendly or offensive. So if we can change our words, we can change our behavior. The third rule is about focusing on the future. If the people’s thinking is locked into the past, they cannot move into the future. We can think and analyze the past, but more important we have to think about how we will create the future. The things to build our future are very different from the past because conditions and people change. Are the authors’ ideas original? The story of perception was first explained in Peter Senge’s book “The Fifth Discipline.” The importance of language was first conceptualized by Chris Arygris with “Right&Left Column Thinking.” Different authors have written about the future of focused thinking, but Philip Zimbardo’s book “The Time Paradox” mainly focuses on this subject. However, the ideas are not totally original in this book. “The Three Laws of Performance” is a good compilation of cases and clarifies the importance of changing perception in any performance improvement attempt.

Meatball Sundae

Seth Godin is one of the most interesting gurus in the field of marketing and business. He became famous with the concept of permission marketing. According to Godin, mass marketing is insufficient in today’s Internet world.
One of his recent books is “Meatball Sundae: Is Your Marketing out of Sync?” He says in this book that trying to use online marketing techniques for traditional businesses is useless. It is something like a meatball sundae, the unfortunate unification of two different good things. The sundae toppings are Internet marketing, social networks, adwords and the other tools available on the Internet; and the meatball is the old traditional stuff, like cars or a book, or TV sets. Traditional businesses with the mindset of traditional businesses cannot adapt themselves to the new environment. One of the most important examples from the book is the comparison of Barnes and Noble and Amazon.com. Barnes and Noble is one of the biggest bookstore chains in the United States. However, its performance compared to Amazon.com is dismal. If you visit the two companies’ websites, you won’t see much of a difference. Why then is Amazon.com much more successful? Bear in mind, Amazon.com does not have a single store in the real world, while Barnes and Noble has more than 800. Any customer can experience the store in Barnes and Noble’s case, while they cannot do the same with Amazon.com. One of the explanations for this puzzle is the number of books available from the two companies. Amazon.com provides many more books than Barnes and Noble. Traditional companies have difficulty in adapting themselves to the new world of online marketing. Godin explores 14 trends that are changing business. Here are some of the trends he underlines in his book:  Intermediaries are being eliminated. The Internet provides direct communication between the producers and consumers.  The voice of the consumer is louder than ever. With blogs, Facebook and other available options consumers can easily destroy any company’s reputation.  Stories are very effective ways of spreading a message. However, any story can start without the control of one company, so it is better to be proactive and lead one story and use it as a tool of promotion.  Speed is very important. Customers have very short attention spans; traditional companies can be slow in providing a response to customers.  There is a new reality called a “long tail.” Customers reward companies that can provide diverse choices and cater to increasing tiny micro-niches.  Selling everything piece by piece. The Google approach to advertisement has changed the game in marketing; instead of mass marketing, successful companies do advertising person by person.  Channels of communication are increasing by the day, making it much more difficult to configure a strategy of communication.  Direct communication and commerce between consumers has become a reality. Today, eBay and similar services/systems have been accepted and used by millions of people to buy and sell goods from ordinary people.  The Internet eliminates the scarcity of any good or service. You can find anything on the Internet -- a book from the 1920s or unlimited hard drive storage capacity.

Build to Last

“Built to Last: Successful Habits of Visionary Companies” can be regarded as the most important book written in the field of business management.
The authors’, James C. Collins and Jerry I. Porras, survey on visionary companies helped them learn the fundamental principles of permanent success. They evaluated 36 companies and selected 18 as visionary companies. The companies were selected based on their stock exchange performance since 1950. The list of 18 companies identified as visionary include 3M, American Express, Boeing, Citicorp (now Citigroup), Disney, Ford, General Electric, HP, IBM, Johnson & Johnson, Marriott, Merck, Motorola, Nordstrom, Philip Morris, Procter & Gamble, Sony and Wal-Mart. The authors tried to find the common principles behind the success of these companies. The first principle they came up with is “Be Clock Builders, Not Time-Tellers.” In the business world we are familiar with charismatic leaders. Usually, charismatic leaders come to the stage in times of crisis and when without them others are simply unable to find their directions. Collins and Porras mention that system architects are much better leaders than charismatic leaders because while the latter group tells the time, system architects build clocks. The second principle that authors suggest is: “Embrace the And, Reject the Or.” Winning companies seek to do very well in both the short and the long term. There is, however, a conflict between short-term and long-term objectives. To increase sales in short term, companies like to provide discounts; however, to protect a brand for a long time, prices should be stable. Smarter companies will find solutions to fulfill short- and long-term requirements. The business management textbooks start with a definition: The aim of the corporation is profit. However, in this book there is a controversial claim. Visionary companies are more than profits. In other words, their fundamental aim is to serve society, not to make profit. If you serve society, the profit comes consequently. Focusing on profit drives the management of companies to think short-range. However, focusing on serving provides bigger profits in the long-term. In the dynamic and fast changing environment of the business world, the detailed management procedures and the tight rules are not useful. The companies need a direction more than a handbook about how to drive a car. This direction is provided by a core ideology, a set of core values and a sense of purpose. The companies should be prepared to change everything about itself except its core ideology. One of the most interesting points in the book is summarized as BHAG (Big, hairy, audacious goal). Without having a big goal, it is impossible to reach a big end. According to authors, the companies should develop a clear and compelling BHAG that requires little or no explanation. Another interesting point that the authors points out is creating cult-like cultures. Not the procedures, but the culture is very important in a company. Like a religion and its believers, a company should have a culture like a sect, and employees should be like sect members. With strong loyalty to the company, every employee should dedicate himself/herself to the company. One of the findings of the authors in these visionary companies is what they call the Darwinian approach -- natural selection and the survival of the fittest. Some of the employees will not adapt to the culture and they will leave the company and the ones who fit in the company will survive with the company. Not only the people, but methods and strategies will also remain in the company that fits the environment and produce wanted results. One of the thought-provoking quotes is, “When the CEO retires, we employ a new doorkeeper.” This means instead of transferring new managers to the company, these visionary companies promote somebody who is successful from the staff. The visionary companies’ management teams are homegrown. The book ends with a chapter about how to build a vision because without a vision, there is no compass that can guide you while you are trying to walk towards the future. Throughout the book you can read extraordinary stories of companies like Sony, 3M, HP, Wal-Mart, Merck and others. It is a must read for everybody in the field of management.

Made to Stick

Chip Heath and Dan Heath became famous for their first book, “Made to Stick: Why Some Ideas Survive and Others Die.” The book investigates the concept of stickiness, how some ideas stick to people and spread.
People don’t forget sticky ideas and change their mindsets with them. The Heath brothers write the formula of stickiness using the acronym “SUCCES” (without the last “s”). There are six characteristics of sticky ideas. They should be simple, unexpected, concrete, credible, emotional and based on a story. Making something “simple” provides an easy reference point for everybody. The clarification of complexity helps us to find the core of any idea. And when we find the core, we find an effective means of communication. For example, “sending an astronaut to the moon, and bringing him back” is simpler than achieving progress in the aerospace industry. Southwest Airlines’ goal is “to be the cheapest airline company.” The two goals are simple, and everyone can easily understand and adapt their behavior toward this goal. Anything unexpected grabs people’s attention by surprising them. An unexpected idea can break a pattern in the minds of the audience. The unexpectedness is parallel with doing something extraordinary; on an airplane you hear the announcement: “Dear children, please fasten your parents’ belts. If you can’t, please let them fasten their own belts and yours.” This announcement is unexpected; and if you hear something like this, you cannot forget it. Any idea that becomes concrete with an example might be sticky. Most tales are more persuasive than mere advice. Advice becomes a kind of reality within the tale; however, when it is not given at the end of a story, it is only words. Abstract concepts like numbers can be forgotten easily. We can forget the number “seven,” but we don’t forget “Snow White and the Seven Dwarfs.” High performance is abstract, “Strong as Hercules” is concrete. The credibility of an idea is very important. When one idea is supported by an authority, it may become sticky. For example, if we hear that SARS is a dangerous epidemic from the Ministry of Health, we start to assume that it is dangerous. However, although it may be misinformation, we still believe it because it comes from a credible authority. If the idea has convincing details, accessible statistics or testable credentials, it provides internal credibility. There are some ideas with which we can have emotional associations. “While we sleep in our warm beds, earthquake victims sleep outside. We have to donate money for tents and sleeping bags.” This call for action has an emotional value. On the Brooklyn Bridge there was a beggar waiting for coins with a sign “I am blind. Help me.” An person from advertising changed the sign to read “On this beautiful summer day, while you can see the flowers, I can’t. So, please help this poor blind man.” After this small change, many people gave more money to the beggar. With the new phrase, people can empathize with the blind man; they can relate to his disability. Stories are the most effective way of making one idea stick. I will share with you an excerpt from the book: “Dave was recently in Atlantic City for an important meeting with clients. Afterward, he had some time to kill before his flight, so he went to a local bar for a drink. He’d just finished one drink when an attractive woman approached and asked if she could buy him another. He was surprised but flattered. Sure, he said. The woman walked to the bar and brought back two more drinks -- one for her and one for him. He thanked her and took a sip. And that was the last thing he remembered. Rather, that was the last thing he remembered until he woke up, disoriented, lying in a hotel bathtub, his body submerged in ice. He looked around frantically, trying to figure out where he was and how he got there. Then he spotted the note: Don’t move. Call 911. A cell phone rested on a small table beside the bathtub. He picked it up and called 911, his fingers numb and clumsy from the ice. The operator seemed oddly familiar with his situation. She said: ‘Sir, I want you to reach behind you, slowly and carefully. Is there a tube protruding from your lower back?’ Anxious, he felt around behind him. Sure enough, there was a tube. The operator said: ‘Sir, don’t panic, but one of your kidneys has been harvested. There’s a ring of organ thieves operating in this city, and they got to you. Paramedics are on their way. Don’t move until they arrive.’ This story is not true; but we remember it and we have a tendency to tell the story to somebody else. It is a powerful story including emotional, concrete details. The oldest texts are legends; we remember them because they are stories.” The Heath brothers’ book is a perfect guide for editors, copywriters and marketing professionals. It shows how to market one idea with concrete tools.

When sparks fly

Dorothy Leonard from Harvard University has authored a number of books in the field of creativity and innovation.

Her first book, “Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation,” was one of the first books on knowledge and technology management. She also co-authored with Walter Swap, “When Sparks Fly: Harnessing the Power of Group Creativity,” which was awarded Best Book on Creativity by the European Association for Creativity and Innovation. In this book, Leonard, a specialist of innovation management and Swap, a specialist of group dynamics, converge their knowledge and create a roadmap for innovative groups. First, they question the myths about organizational creativity. There are some dominant creative individuals in society. They have always unusual ideas and some of them go on to become icons like Steve Jobs. Barton and Swap claim that for group creativity, the required ingredient is people who come from different backgrounds. A creative group and a group of creative individuals are different formations. The authors believe that we can achieve creative output from creative groups formed by ordinary but different people. The light bulb is the number one symbol for creativity. But this symbol reminds us that creativity is an individual process because the bulb is always depicted over the head of an individual. However, many creative products, projects or buildings are often accredited to famous individuals who had groups working with them. For example, the transistor is known as having been invented by William Shockley. But the transistor was the invention of a team including Walter Brattain, John Bardeen and Shockley. Creativity is a process of group interactions. A certain IQ level might be good for creativity. According to Frank Barron, the author of “Creativity and Psychological Health: Origins of Personal Vitality and Creative Freedom,” an IQ of 120 is sufficient for creative thinking. An IQ above this level does not create a significant difference. I think this is questionable. If for creativity we need some dumb ideas, we need some dumb questions and these can come from people at all levels. Some may think that creativity is important only for big innovations, such as the light bulb, computer or the space shuttle. Ideas for small improvements are also important and should be regarded as creativity. For example, in traditional refrigerators, the freezer section is located on top. Whereas in more recent refrigerator design the less-used freezer is located on the bottom, and more frequently used compartments are located within easy reach on top. This is not a big innovation, but it is a practical improvement. Leonard and Swap also mention that creativity should be managed, organized and facilitated. Without providing a budget, resources and a place for the creative team, it is not logical to expect creative output. They explain creativity as a process “of developing and expressing novel ideas that are likely to be useful.” The end result of the creative process is innovation, that is, the embodiment, combination or synthesis of knowledge in novel products, processes and services. The creative process involves different steps which are not necessarily linear. Within any step, a smaller cycle of some or all of five steps can occur: preparation, innovation opportunity, generating options (divergence), incubation and selecting options (convergence). Preparation requires prior information, research or knowledge. Innovation opportunity is usually a problem in one area. If you invent a can, you will need a can opener. Generating options is necessary and in general this is what we perceive as creativity. Incubation is stopping to think, or research; it is the free flow of minds for a while expecting to reach an ultimate solution. It is sometimes walking, driving or resting. The final step is choosing the right option. With this step, the process of implementation begins. Leonard and Swap’s book is not a revolutionary book in group creativity but might be a practical map.

Chaotics

“Chaotics: The Business of Managing and Marketing in the Age of Turbulence” is a recent book by Philip Kotler and John A. Caslione. There are many books on crisis management and this topic is very popular.

In a world that’s always in crisis in recent decades, trying to learn how to cope with a crisis is very important. However, many people become disappointed when they first start reading books on crisis management because most books about crisis management evaluate crises like earthquakes, floods or fires. But this is not what many readers are looking for. People are looking for a book or seminar on how to deal with economic crises. “Chaotics” is the first comprehensive book on managing in turbulent times. Not only big corporations, but small and medium enterprises can also benefit from this book. So, what are the strategies and tactics that the authors suggest about coping with a crisis? The authors classify approaches to crises as traditional or chaotics approaches. In the earlier stages of an economic crisis, traditional companies present a confident business-as-usual attitude to minimize a pending potential torrent and to quell employees’ fears. They develop a wait-and-see attitude before making structural changes. Chaotics strategies are very different to this strategy. These companies see a crisis as an opportunity and try to build new strategic behaviors into key operations and functions to protect the core business and to grow at the expense of weaker, less-prepared competitors. In the mature stage of a crisis, traditional companies undertake aggressive across-the-board cost cutting, including cutting staff. They cancel new projects, new product research and introductions and cancel acquisitions. Companies with the chaotics approach broaden their resources and enlist all strategic stakeholders as partners to guarantee success. They acquire new competitors, new talent and new resources to secure and grow the core business and make it stronger. In the final phase of a crisis, companies with a traditional approach try to make up for past mistakes, downsize to become profitable and attempt to rebuild the business (employees, customers and other stakeholders). Whereas companies with a chaotics approach maintain a consistent steady forward momentum. They move purposefully and deliberately to build growth against faltering competitors. The authors believe that investing in the core business during turbulence is a productive strategy. They give an interesting example of Ryanair. Ryanair is the biggest budget airline in Europe. The company grew during the 2008 crisis while other budget airlines were in trouble. The divergence between Ryanair and easyJet was highlighted during a recent period of overall uncertainty for the airline industry when, during the same week, Ryanair boss Michael O’Leary announced a dramatic plan to expand Ryanair while easyJet’s Stelios Haji-Ioannou urged his management team to adopt exactly the sort of caution that O’Leary was throwing to the wind. According to the authors, O’Leary sees economic downturns pressuring weaker carriers to cut routes, allowing his airline to move in. He also sees the opportunity for Ryanair to benefit during a downturn from falling jet fuel prices, declining labor costs and the possibility of cash-strapped rivals reneging on orders for new planes. So as the recession landed in Europe and other airlines shrank and merged, O’Leary’s expansion plans lifted off, with O’Leary claiming Ryanair could double its profits and its passenger numbers by 2012, despite signs that short distance air traffic was declining. In October 2008, against the backdrop of Ryanair’s bold moves, Sterling Airlines, a fast riser on Europe’s low-cost airlines scene, went bankrupt after its Icelandic owner ran out of money (seemingly overnight), adding Denmark’s second-largest carrier by fleet size to a list of more than two dozen carriers around the world that ceased operating that year. Only those courageous few, like Ryanair’s O’Leary, are willing to swim against the current and defy conventional wisdom. This gives them the greatest chance to strategically position their companies to gain market share and grow shareholder value. The best executives resist any such desperate extremes by preparing for the worst while focusing on what their companies do best. Chaos has a way of giving providing an advantage for those who find opportunities in present circumstances -- whatever those circumstances are.

The Dragonfly Effect

“The Dragonfly Effect: Quick, Effective, and Powerful Ways to Use Social Media to Drive Social Change” is a book by Jennifer Aaker and Andy Smith.
The authors use the dragonfly as a metaphor to underline the four key elements of a change movement in the social media. The dragonfly is the only insect able to move in any direction when its four wings work in harmony. Based on real world cases, the authors discovered that there is a four step process to start a change movement on the Internet. Last year I started to collect books on social media, including Facebook, Linkedin, Twitter. Most of these recently published books try to explain the basic mechanisms of these social media tools. The Dragonfly Effect is different, because the authors are not trying to explain a single social media tool, but attempting to clarify how to reach a single, concrete goal using social media. The goal might be to find an almost impossible bone marrow match for a friend, to raise millions for cancer research or to elect the president of the United States. The very first and most impressive case the authors found is the case of Sameer Bhatia. Bhatia also a Stanford graduate with Indian roots who contributed to the popular web site MonkeyBin. On a routine business trip to India when he was 31, he started to feel sick and doctors diagnosed him with leukemia, a type of cancer that starts in blood-forming tissues, such as bone marrow. It was disappointing news, similar to losing your bride on your wedding day. His friends, entrepreneurs and professionals from the Internet world, did not want to accept it and they decided to attack Bhatia’s illness with social media. It was a decision you might see on science fiction or action movies. Bhatia’s leukemia could be cured; however, he needed a bone marrow transplant and the odds of finding a bone marrow match were one in 20,000. Another problem was that Bhatia and his friends were in the US, whereas the match should be found among South Asians, and they only had a few months to find an exact match. They used web 2.0 services -- interactive web tools like Facebook, Google Docs and YouTube to organize bone marrow drives all over the US. In 11 weeks, supporters registered 24,611 South Asians in the bone marrow registry and found a match for Bhatia. The story is more than this, not just Bhatia, but 80 other people who were suffering from the same disease found exact matches as well. Although this attempt was started just for Bhatia, it helped 81 people, a celebratory consequence. The story showed that social media is not just a stupid tool to say that you’re drinking coffee and happy on Twitter. The social media might be a very good tool to trigger a social movement or change in society. There is a four-wing model the authors of the book suggest to anybody who desires to create change through social media: focus, grab attention, engage and take action. By analyzing the story of Bhatia, the authors emphasize the importance of setting a clear goal. Second, to reach the goal, we have to grab attention by presenting a personal and unexpected message. Third, we have to create a personal connection by telling a story. Finally, we have to create some mechanisms to empower others to take action. The authors analyze different case studies like Gap, Starbucks, Nike and Groupon. Most of the books based on technology will be obsolete, soon. I would guess that The Dragonfly Effect, however, will remain a reference book because the authors suggest a model of social change.