Emotional Intelligence (EI) – The Other Kind of Smart

 

Success in life depends on numerous factors including brainpower, education, personality, ambition, inheritance, and health. Yet, we all know people who score highly in these areas, but who accomplish little in life: brainy people with high academic achievements who cannot hold down a job; ambitious people who never give up, but who never succeed either; and people with substantial inherited wealth who squander it all. Conversely, we know individuals who were academically mediocre, inherited nothing, yet, achieved great success. Clearly, there’s something else at play. Nearly always, that “something else” is emotional intelligence (EI). Yet, important though it is, EI is often overlooked because it’s a nebulous concept, which attracted little media attention until recently. So what exactly is it?

 

In a way, it’s like a mental version of the Japanese martial art of Judo. In Judo, contestants need to harness a competitor’s strength as well as their own in order to win. For that, they must analyse and understand the other person’s mental and physical attributes. Similarly, people with a high EI level are keenly aware of other people’s emotional plusses and minuses as well as their own; they use both to create empathy and encourage cooperation in order to achieve a desired result. Of course, other factors matter, but without a high level of EI, most interpersonal relationships are frustrating, uphill struggles.

 

Unlike Judo, however, EI is not primarily about winning a game or contest (though it certainly improves a person’s chances of success in a competitive environment). It’s more about seeing the other person’s point of view and attributes – both positive and negative – while being fully aware of one’s own in order to achieve the best outcome. Good managers with a high level of EI, for example, bring out the best in employees by constantly being sensitive to their subordinates’ psychological triggers, while also being fully aware and in control of their own. Crucially, those managers don’t just ensure that emotional prejudices won’t impede a desired outcome, but actually turn them into positive forces that support it.

 

Some people are born with a high level of EI. It should not, however, be confused with charm, charisma, or an agreeable personality. Some charmers may have a high EI, but many don’t. Like most of us, they too can greatly improve their personal and professional lives by increasing it. Unlike IQ, which is fairly static throughout life and difficult to alter, EI can be improved with the right techniques. These techniques involve focusing on three key areas: ourselves, others, and the interaction between both. That may seem simple, but it’s not. Let’s look more closely at the three areas:

Ourselves

We must identify the factors in our interpersonal relationships that trigger quasi-automatic reactions in us, so that we can replace such reactions with well-considered responses. The goal is to take control by turning unproductive habits into productive ones. (See my two blogs related to the power of habit: “The Winning Habit” and “Don’t Leave it Too Late to Start Being Early”). By identifying the triggers, we can control our impulsive reactions. The result is nearly always transformational because it quickly turns negative or neutral relationships into nurturing and mutually beneficial ones.

Others

When we’ve developed the habit of controlling our own reflexive responses, we can focus our attention on others. The most important skill in dealing with other people is listening, and many of us are poor listeners. To be a good listener we need to develop the habit of turning attention away from ourselves and fully onto the other person. When we do that, the other person unconsciously focuses all their attention on us. My blog “Stop, Look, Listen” deals comprehensively with this vital skill.

Interaction

Mutual understanding is automatically improved when even one person in a group is acutely aware of the reflexive response triggers, and knows how to manage them to produce a beneficial outcome. A manager with those skills can transform an entire department into a hive of productivity, pride, and mutual respect. It’s hardly surprising that most CEOs of successful companies have an abundance of EI.

 

The process of increasing your EI can start immediately. You don’t have to join a club or enroll in a course. All you have to do is make the decision. The sooner you do that, the sooner you’ll start enriching your personal and business relationships, and, in the process, transform your quality of life.

Jeff Robinson

@contrariansmind

Investing 101: Pennies from Heaven

 

A few years ago, a good friend told me that he first invested in penny stocks because of the word “penny.” He naively assumed they were an inexpensive and relatively risk-free way of getting into the stock market. He was half-right: the unit price of a penny stock is generally low (in the past, many actually traded for pennies, hence the name). Whether or not they’re inexpensive, however, depends on how much you’re willing to spend. But one thing they’re not is risk free. To be fair to my friend, his mistake was a common one and, like him, many people have the wrong idea about penny stocks.

So, what exactly are penny stocks? There isn’t a single, agreed definition of the term – it varies depending on whom you ask. Nevertheless, penny stocks usually have all or most of the following four characteristics:

1. Low stock price, usually below $5, often much less
2. Relatively small market capitalization, usually below $300 million, often much less
3. Limited liquidity due to low trading volume
4. Not traded on major stock exchanges

Investing in penny stocks is significantly riskier than investing in stocks traded on the major exchanges for three main reasons. First, unlike stock traded on the tightly regulated major exchanges, penny stocks are traded on the OTCBB (Over-The-Counter Bulletin Board) and the “pink sheets.” The OTCBB is an electronic trading service provided by the National Association of Securities Dealers. It has limited listing conditions, though there are requirements for companies to file some financial information with the SEC (Securities and Exchange Commission). The “Pink Sheets” is a list of OTC (Over-The-Counter) stocks published daily by the National Quotation Bureau. The stock ticker symbol of such companies has the suffix “.PK.”

Second, detailed reliable information about the underlying companies and their principals is usually difficult or impossible to come by. This means that prospective investors struggle to make informed decisions on the stocks’ potential.

Third, frauds are widespread in this largely unregulated environment. A common and relatively easily perpetrated fraud is the biased promotion of the stock by unscrupulous individuals. These often-plausible tricksters are paid to disseminate misleading or even false information about a penny stock company with the aim of convincing gullible people to buy the stock. Since trading volume for most penny stocks and the total number of issued shares are both low, a relatively small number of people unexpectedly purchasing the stock can dramatically affect the price. When the price peaks, the scammers make a large profit by suddenly selling their shares, and leave the gullible new shareholders holding a whole lot of virtually useless paper.

Yet, with penny stocks, as with every kind of investment, there’s a broad range of risk profiles. Not every penny stock is connected to fraudulent activity. Many are the stock of legitimate companies and some return good profits to their stockholders. The problem is that filtering the good ones from the bad is almost impossible because of lack of dependable independent information. That lack of information coupled with an inherent illiquidity makes the best of them risky investments.

After all that, I’m now going to be the true contrarian and go on record for a specific penny stock! Why? Because, for careful people who do their homework, penny stocks can yield significant returns. And being a contrarian, I naturally think outside the box and tend to follow my gut feeling. The stock in question is Bontan Corporation (OTCBB BNTNF). But first, I must state my personal interest: I’m a shareholder, as are other family members. I don’t represent the company, receive compensation from it, or expect to receive any compensation in the future (apart from benefiting if the stock performs positively). I’m involved primarily because I believe that, unlike many penny stock companies, Bontan has exciting short- and medium-term plans. Those plans are both exciting and credible, and are the reason I think that the company’s prospects are very encouraging.

Briefly, the plans revolve around a complex deal Bontan is currently working on with Portage Pharma Ltd. – a deal it expects to conclude by April 15. Portage Pharma’s management team is impressive. It boasts some big names in the biotech business – people with remarkable track records who understand the biotech industry intimately and the potential of the current deal with Bontan. Nevertheless, like all penny stocks, indeed all investments, it’s not without risk. (See my recent blog article about shrewd investing “Investing 101: Apple’s Lessons for Investors.”) For me, however, Bontan is not a run-of-the-mill penny stock company. That’s why I’m an investor and why I’m endorsing it. Of course, it’s a risk, but it’s one I’m willing to take.

PS

For those interested in learning more, below is the March 26 2013 Press Release about the proposed deal and the two companies involved.

Bontan Signs Letter of Intent

Jeff Robinson

@contrariansmind

Investing 101: Apple’s Lessons for Investors

 

 

What is it about us humans that we can be oblivious to crucial evidence that’s as clear as day? The stock market is a good example. I’m not suggesting that as investors we ignore blatantly obvious evidence of a stock’s likely trajectory. What I’m referring to is more serious. It is that we follow the advice of highly paid independent investment analysts when there’s compelling evidence that many are far from independent, but navigate a complex web of conflicting interests in a private club restricted to the analysts themselves and to the big investment banks and brokers they “advise”. The losers are the other players, especially the smaller investors. The stocks these analysts champion rise because enough people believe their hype. That hype often has little to do with a company’s track record, future plans, senior management, or competition. This problem is widely known, yet most investors don’t seem concerned. It’s possible that many believe that the problem was solved when the US Congress passed the Sarbanes-Oxley reform legislation in 2002. But they’d be wrong. The level of abuses decreased, but the problem is still endemic and more creatively disguised.

 

A second difficulty with expert analysts is a variation of what I call “The IBM Syndrome” – the decades-old IT adage that says, “You don’t get fired for buying IBM equipment.” An IT director might have saved a company a substantial sum by recommending a more cost-effective alternative manufactured by a less well-known computer company, but few IT managers were willing to take the risk; they followed the herd and recommended IBM. Investment experts suffer from the same herd mentality. Like IT directors, most follow each other, afraid to make the contrarian call and go with their gut feeling. Just look at Apple stock.

 

The collapse of Apple’s share price since late 2012 was on the cards for at least a year for numerous reasons. I was one of a small number of commentators who raised the red flag early. See my January 2012 blog “Has Apple Reached the Tipping Point?” Yet most experts and investors chose to ignore powerful evidence, and followed each other like lemmings. The stock was trading at $702 on September 19^th, 2012. By March 4^th 2013, it had tumbled by 40% to $419. Ironically, that is roughly the price it was trading at when I wrote my blog article in January 2012.

 

Apple’s stock price collapse is a textbook example of a third and less common investing problem: vanity. Apple’s marketing strategy ingeniously exploited the guru-like veneration of Steve Jobs by implying that not only were Apple products ultra-cool, but so were their users. They bought into this vision and saw their devices as strong fashion statements, which told the world that they themselves had a unique sense of style, above average intelligence, and the cash to prove it. Apple exploited this age-old marketing stunt to the full. Yet the results surpassed the company’s wildest dreams because not even Jobs could have guessed that the same psychological factors that caused people to buy iPhones and iPads would induce serious analysts to recommend Apple stock and astute investors to buy it. Yet millions of usually cautious people did just that. They bought first to make a statement and second to make a profit.

 

A fourth factor that works against ordinary investors is experts’ greed. Even if legislation eliminated all conflict-of-interest issues (which it couldn’t), and analysts and brokers stopped following the herd and left their egos at home, underlying greed is never far away. Despite Gordon Gekko eulogizing the word, greed is not good. Analysts’ recommendations to “buy” as opposed to “sell” stocks are disproportionately weighted in favor of the former because of greed. Brokers’ revenue depends on trading volume, and a “buy” is likely to generate more trading than a “sell” since everyone is a potential buyer, but only stock owners can sell. ( yes you can borrow stock, sell it and go short – a blog post for later)

 

Not all experts are dishonest, or follow the herd, or are unduly influenced by greed and fashion. Many are meticulous and trustworthy, and provide valuable, accurate advice, though they often struggle to convince clients that they’re not just like the rest. That’s a pity since all investors need unbiased market intelligence, whether they’re in the market for the long haul or a quick profit, and whether they stand to gain from a stock rising or, in the case of short selling, from it falling.

 

That’s why investors should do their own research, even if they also pay for professional advice. They should critically scrutinize company data from numerous unrelated sources. That data should provide comprehensive information on the company’s key personnel, recent balance sheet figures, innovation record, competition profile and the likely future impact of local, national and global political developments on its business. If Apple investors had coldly examined such data in 2012, most would not have been burnt. Yet they chose to ignore strong warning signs – two in particular. First, the company’s chief executive and visionary leader, Steve Jobs, had recently died. Second, a growing number of formidable innovative competitors – Samsung in particular – were eating into Apple’s core markets of smartphones and tablet computers at an alarming rate. In the last six months, a third less obvious but potentially lethal warning sign appeared on the horizon: A growing number of people were starting to see Apple’s products as being for an older market segment. Samsung had shrewdly nurtured that image for a few years, and last year highlighted it in a clever TV advert for the Galaxy S3. It shows a long line of people queuing for what is obviously a new iPhone, (though the advert doesn’t explicitly say so). Unlike all the others, one young guy in the queue is using a Galaxy S3, and the guy beside him asks, “…guess the Galaxy S3 just didn’t work out for you?” “No, I love the G S3,” the first one says, “I’m just holding this spot for someone.” When the “someone” arrives it turns out to be two people: his parents. Ouch!

 

On March 4^th, investment guru Jeff Gundlach (who like me had predicted the collapse of Apple stock a year ago) was quoted by influential Business Insider website as saying that the collapse of Apple’s stock price “effectively debunks ‘efficient market’ theories.” The efficient market theory hypothesizes that the market always prices a stock correctly because it accounts for all relevant information about the stock. Apple proves how wrong and dangerous that theory is.

 

Apple’s stock collapse teaches us many valuable lessons, but four in particular. The first is to treat investing as if we’re lending money – in a way, we are; second, to ignore our egos and fashion trends, and dispassionately examine the market and the company’s fundamentals. The third lesson is to follow the advice of experts only if it makes sense to us, and fourth, to invest no more than we can comfortably afford to lose. Only when we’ve taken those four lessons to heart and done our homework, can we make an informed and independent decision about any potential stock investment. Only then should we consider reaching for the checkbook.

 

Jeff Robinson

@contrariansmind

P.S. After many months of consideration I have locked in on my next stock destined to crater. It currently has a 19B market cap and trades around $175.  My blog will be out on it within 2 weeks. Stay tuned…

 

Chart on AAPL

 

 

Stop, Look, Listen

 

“Information” is a buzzword. Computers gather vast amounts of it, filter it, and help us use it to our advantage. It may be a cliché to say that information is power; yet, it’s a cliché worth repeating because we’re barely aware of the most powerful information of all: analogue information that intimately affects our lives and that has been around as long as mankind. The sad thing is that we ignore much of it. We go through our days like a horse with bad eyesight who also wears blinkers. We only see what’s literally “staring us in the face” and even then, we often fail to appreciate its significance.

 

The reason is our minds are preoccupied with data that has little to do with where we are at a given moment and what’s around us. We’re mainly concerned with our recent past or our imminent future. We’re rarely “in the moment” as the phrase goes, so we’re unaware of all the useful data around us – data that could lift our spirits or warn us of danger – because there’s so much background noise buzzing around our heads. We hardly notice the trees, the sky, or the people we pass on our way from one place to another; we’re not truly aware of the pleasant-smelling plants we walk by in the park, or the blissful warmth of the sun on our skin, or how it sparkles on water. We miss so much of the world’s beauty because we’re in a constant and blinkered hurry.

 

This problem is not new, but it’s become worse in recent decades, and it’s accelerating. Never before in man’s history have we been so constantly bombarded with data. Most of this is digital data delivered to one of our many electronic devices. Much of the data is of little use to us, but like gossip, we’ve developed a voracious appetite for it. We’re so bombarded with it especially by social media that our perception of the outside world is molded more by software than by our senses.

 

The problem even extends to our face-to-face communication. In this vital area, increasingly we’re becoming bad listeners and bad observers. The result is that all parties to a conversation miss much of what’s being communicated. We can’t force others to change, but we can do much to address the problem ourselves. Four simple techniques greatly enhance face-to-face interaction, and usually cause the other person to pay much more attention to us too.

 

First, we should give our full attention to the person speaking by maintaining direct eye contact and really listening to what they’re saying. Second, we shouldn’t interrupt them until they’ve finished a specific point, even if we strongly disagree with what’s being said. Third, we should let them know that we’re getting their message by using facial expressions like nodding and smiling. Fourth, when it’s our turn to speak, we should first ask a few simple questions to ensure that we understand the full meaning of what the other person had just said. This fourth point has another important function: it shows that we’re interested in the other person’s point of view, even though we might not agree with it. Using these four simple techniques has an almost magical effect on the communication because it prompts the other person to act in a similar way towards us.

 

Much fuss is often made of non-verbal communication, especially the kinds most of us are hardly aware of, like slight changes in posture, tiny hand movements, or minute facial expressions. These convey independent messages that usually strengthen the verbal one. But sometimes they contradict it. For example, when a speaker is nervous they may furrow their forehead or bite their lips. Such signals are often interpreted as meaning the speaker doesn’t fully believe his or her own words. Some people take such signals “at face value,” in other words, as solid evidence that the person is lying. More often than not, however, that’s the wrong interpretation. According to Joe Navarro, the former FBI special agent and bestselling author of many books on this and related subjects, it’s almost impossible to reliably determine if someone is lying through reading their non-verbal messages. He says that, though a person is on balance more likely to be lying, if he or she displays many different non-verbal signs that usually suggest lying, it’s far from certain. That’s one reason, he says, that law-enforcement agencies always get independent collaborative evidence; the other reason is that courts attach no weight to such non-verbal signals; nor should we. I just finished reading his latest book: What Every Body Is Saying - I highly recommend you read it.

 

To get the most out of life we must live in the moment. Eleanor Roosevelt wisely said “The purpose of life is to live it, to taste experience to the utmost, to reach out eagerly and without fear for newer and richer experience.” We must be keenly observant of the world around us in all its aspects and when we’re with other people we must really focus on them. That doesn’t only mean that we benefit from the abundant beauty and inspiration offered by world around us; it also means that we show respect for others, and so, develop a mutually deeper understanding of each other. Few gifts are more important than those.

 

Jeff Robinson

Contrarian’s Mind

 

 

Thriving on Adversity

 

 

Natural systems become stronger each time they’re confronted by a disruptive event. They improve not by resisting change but by adapting to changing circumstances. You might say that they learn from experience. In biology, the best “mistakes” – mutations that bestow an advantage – endure, while those that don’t eventually disappear.

 

The same rules apply to systems created by humans. Yet many people want to stop that undulating course of the world’s complex systems by trying to fight or even eliminate inherent fluctuations. From finance to education, they want to get rid of the natural stressors. They envisage a scenario where major events are predicted so that the most disruptive can be avoided. They want a graph where the line showing events and their magnitude over a specific period is as close to a straight line as possible.

 

In economics and finance, they aim to all but flatten the business cycle. In education, they want to make every child’s achievements equal. So, some schools have eliminated red correction marks because they might undermine the confidence of sensitive children. In school sports, they award medals to every participating child, telling them that they’re all winners and that nobody lost. (See my blog: “Education and Parenting: Are We Sowing the Seeds of Disaster?”)

 

In the financial world, governments and central banks aspire to remove natural market fluctuations by aggressive intervention policies and restrictive legislation. Not long before the 2008 financial crisis, they confidently predicted that their robust systems meant “the end of booms and busts,” while simultaneously allowing the development of banks that were too big to fail. When they did fail, the authorities forced the taxpayer to bail them out, yet didn’t hold any individual in those banks, or the agencies that regulated or rated them, personally liable. (See my blog: “Skin in the Game”). Many financial institutions have again become too big to fail because the authorities have yet to fundamentally change the system.

 

As individuals we too want to eliminate the ups and downs of nature and the systems that directly affect us. When we feel down, we demand anti-depressants from our doctors. When we ache, we expect another pill; we even want pills for ailments we don’t have “just in case.”

 

From children to politicians, educators to bankers, fewer of us stand on our own two feet and take responsibility for our actions. By removing too many of our natural challenges, we’re weakening our ability to handle the big ones. As a result, we’re becoming as vulnerable to unexpected events as ice cubes are to a sharp increase in temperature. We’re convinced that we can build a robust defense against every possible occurrence; that no matter how much the temperature rises, we can always build a better freezer.

 

It’s understandable that we should try to predict the future and build bigger and stronger defenses against perceived threats based on those predictions. Yet, for at least two reasons each approach is a waste of resources and doomed to fail much of the time. First, it’s nearly impossible to predict when we’ll be confronted by challenges and what kind of challenges they will be – we can’t even accurately forecast the weather for more than about a week. Second, by strengthening all the defenses to withstand challenges, we’re actually undermining the inherent abilities most systems have to become more resilient through dealing with stress.

 

We can learn much from our bodies. They grow stronger because they’re constantly exposed to mild stressors: If we don’t take regular exercise, for example, we become physically and mentally weaker, and less able to handle any stresses, particularly big ones. At the biological level, organisms become immune to diseases by developing resistance to them. In business, astute venture capitalists invest in entrepreneurs with innovative ideas. But they’re especially drawn to those who have steered a steady and honorable course through a prior business failure, and so are more likely to identify future dangers. (See my blog: “Must We Fail before We Succeed in Business.”)

 

According to Nassim Taleb, the noted Lebanese American scholar and author, we should build systems that are what he calls “antifragile.” Most people, he says, would suggest words like “robust” and “tough” as antonyms of “fragile” because robust and tough things are, by definition, not fragile. But antifragile doesn’t mean “not fragile.” Antifragile things are improved by the stresses of chaotic and unpredictable situations; they benefit from the encounters.

 

Taleb is right. We must become counterintuitive and accept that we cannot know the future. Rather than build robust defenses against every conceivable threat (which is impossible), we must strike a balance between reasonable defense and extraordinary flexibility. We must become more adaptable so that we can respond quickly to the unpredictable. We must be agile and learn from our mistakes. Only then can we become progressively better at dealing with both the future and the many challenges with which it will inevitably present us.

P.S. I highly recommend you read Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb.

Jeff Robinson

Contarian’s Mind 

Skin In The Game

Let’s take a quick look at Ireland. International banks, mainly European, lent oodles of money to Irish banks, who in turn lent it to customers to buy houses. House prices increased faster than inflation, promising big returns on investment and enticing more people to buy more houses. So the banks lent more and more money, often without carefully checking if the borrower was a good risk because the banks were satisfied that the collateral – the houses – fully covered their exposure. In the process, one of the biggest asset bubbles in decades was created. When the bubble burst, the Irish banks pressurized their borrowers to repay, but a large number couldn’t  The Irish banks in turn couldn’t repay their loans to the international banks, thus threatening a collapse of the banking system in Ireland and the viability of the euro.

With variations, this scenario was replicated in many countries, most notably the US, Spain, and the UK. Its repercussions are ongoing and will be felt for decades. Many individuals and institutions share responsibility: the banks, who lent recklessly to each other and then to the retail customers; the politicians, who didn’t ensure that the responsible authorities properly controlled the banks’ activities; and the ratings agencies who gave top scores to the most dubious assets. The vast majority of the population in each country had no responsibility for the problem, yet picked up the entire tab. Those taxpayers didn’t even know they were in the game till they got the bill.

In a classic case of moral hazard, the real players, the ones who ran it and signed off on its outrageous risks had – to coin a phrase of Warren Buffett – no “skin in the game.” They had nothing significant at stake, so nothing significant to lose. Yet the game was so grotesquely rigged that they had everything to gain. Many of them made immense personal fortunes betting with other people’s money – fortunes that they never had to forfeit even after their later bets went disastrously wrong. Sure, a few of the more blatantly negligent were sanctioned. But the “punishment” usually meant early retirement with outrageously generous pensions and severance deals. Most of the top people who oversaw the most reckless activities still hold top positions in banks, regulatory authorities, ratings agencies, government, and elsewhere. Meanwhile, the economies of the affected states and countries are struggling. Many of the people who were left with the bill – the taxpayers – have lost their jobs, and the rest have seen their wealth and income diminish.

The financial crisis exposed many types of moral hazard as well as hypocrisy. Bankers took huge risks they knew would be covered by the taxpayer if something went wrong. Cynically, the same bankers later cited moral hazard to resist partially forgiving the mortgage debts of people most badly hit by the economic downturn.

Moral hazard – not having skin in the game – is not unique to the financial world. It permeates most areas of society and is one of the main reasons much of the world under performs  Politicians, generals, heads of federal agencies, civil servants, union leaders, lawyers, doctors, business consultants, auditors, and top executives of big companies rarely have skin in the game. They seldom suffer real personal consequences when their decisions are wrong. The ordinary people pay for their mistakes.

That’s the way the world works and it’s obviously unfair. But the implications go far beyond inequity. The world’s full potential can never be reached because the major decision makers don’t take personal risks; they have no skin in the game. If they had, they would up their game dramatically because nothing promotes efficiency and concentrates our minds better than the possibility of real personal loss. It’s what makes entrepreneurs different, and is why start-up companies produce so many innovative products and ideas. And it’s why many fail. Ironically, when companies become successful and grow very big, many lose their edge because they end up being run by accountants and lawyers who lack entrepreneurial vision. They use the company’s financial clout to fend off competition for as long as possible. Most of those top executives don’t have skin in the game. They’re highly paid employees with gilt-edged contracts guaranteeing huge salaries and golden handshakes if they leave for any reason, even bad performance.

The Soviet Union collapsed because nobody had skin in the game. The state was the sole employer and banned virtually all free enterprise. People who worked hard got the same pay as those who did the absolute minimum. Not surprisingly, most people just went through the motions of working and the economy paid a terrible price. The factories produced outdated, unreliable industrial and consumer goods unsalable outside the Soviet bloc. The highly inefficient collective farms were unable to feed the population, resulting in frequent food shortages and occasional famines.

Obviously, the capitalist world is different not least because enough people still are entrepreneurial. Yet it’s not as different as some might like to believe. We have allowed a work culture to develop where many players have no skin in the game. From the top down, fewer people take responsibility for the advice they give or the work they do. This undermines efficiency across society, which all but guarantees a poorer world for all of us in the future if we don’t change tack soon.

Jeff Robinson

Contrarian’s Mind

Co-Founders in Business: Be Careful What You Wish For

 

 

Most successful businesses are like one-party states run by benign dictators. Autocracy makes sense in business because companies couldn’t operate as democratic organizations. Even democratic countries grant ultimate decision-making powers to one person, albeit within clearly defined boundaries set down by law. In a company, the C.E.O. has the final say in day-to-day activities subject also to clearly defined rules. The C.E.O. is free to exercise those powers until the board, acting for the shareholders, decides on a replacement. (If the C.E.O. is the majority shareholder, then he or she can never be forced to step down.) Sure, many companies allow a degree of democracy in the way some of their departments operate. It usually aids efficiency and gives employees a greater sense of involvement and ownership. But the department boss has overriding powers, and above him or her is the C.E.O. where the buck finally stops.

 

The C.E.O. sometimes makes wrong decisions, since no human, no matter how brilliant, is always right. In every public company, the board and shareholders know that. That’s why they appoint a C.E.O. on the basis of a track record of making far-sighted, profit-generating decisions most of the time. We will continue to appoint C.E.Os. of large companies that way until we invent a way of connecting the brains of numerous visionary people to a super computer able to distill all their great ideas and come up with the best solution for any given problem. In the meantime, we’re best entrusting our companies’ welfare to one human being – the C.E.O. That doesn’t mean that entrepreneurs in smaller companies and startups shouldn’t have partners. What it does mean, though, is that only one person should have ultimate authority.

 

Problems of authority arise in most organizations, but they’re more likely to have fatal consequences in smaller companies because important investors or shareholders often work in the business, and are constantly close to the action and to each other. That claustrophobic environment often leads to confrontation, which stifles the C.E.O.’s job, disrupts productivity and ultimately threatens the success of the business.

 

That kind of problem arises because, though most entrepreneurs can spot a distant commercial threat long before it ever becomes a serious problem, many are blind to two of the biggest dangers of all, especially at the startup stage. The first is their own unique vision for the new company, and the second is their strong-willed, independent natures. This combination is like a magic potion for a new company run by one person, but is a deadly poison when decision-making has to be shared.

 

Since he set it up twenty years ago, my friend Bill has been running a successful shelving company. Bill likes to tell the story of how his oldest and best friend Jim, (himself a successful business owner), continually tries to persuade Bill to set up a new business with him, “because we get on so well and have such great ideas,” Jim says. Bill always refuses because he has little doubt that their friendship would have soured years ago if he hadn’t  “We’re both as stubborn as mules” he tells Jim, “and going into business together would end in disaster; it would be like racing in a Formula 1 car with two drivers. We wouldn’t get past the first sharp bend.”

 

Bill is right. A company with joint C.E.O.s is driven by two different visions. Every major decision needs the agreement of both people. At best, the value of each one’s vision is neutralized by compromise. At worst, those ongoing conflicting visions make great achievements impossible, and threaten the company’s long-term existence.

 

The entrepreneur’s unique vision is a business’s greatest asset. It inspires and motivates co-workers and partners, and sets the company apart from competitors. In short, it drives success. Without that unique vision, the business is just a doomed bureaucracy carrying out routine tasks with no direction and no goals.

 

You’re probably not an entrepreneur if you feel you can’t follow your business dreams without someone else to share decision making and the risks of failure – someone you can always fall back on. That doesn’t mean that entrepreneurs don’t need help from talented people. They do, which is why they hire experts, and offer the crucial ones minority stakes in the business when pre-defined targets are reached. But entrepreneurs never share ultimate control; they’re clear about their vision and know that it alone drives their business success. A unique vision and the courage to pursue it to the end, no matter what, is what sets entrepreneurs apart from everyone else.

That check box that you so often hear needs to be ticked: “Do you have a Co-Founder?” As Robert DeNiro would say: ” Fogettaboutit”

 

Jeff Robinson

 

Contarian’s Mind

The Mouse-Click That Roared

 

Nothing transforms so many lives as profoundly as the written word. Reading sparks creativity by exposing our minds to whole new worlds teeming with possibilities. Books educate, enlighten, entertain, and inspire. It’s difficult to imagine a world without them. Yet, in many parts of the developing world people can’t afford books. In most of those places, the awesome potential of individuals and whole communities is squandered.

 

Books printed on paper are expensive to produce and awkward to distribute, especially to outlying areas. That’s why people in the poorest parts of the world, who need them most, have least access to books. Digital technology can change all that by making electronic books accessible to people who, just a few years ago, would have had no access to any kind of books. It’s now possible for hundreds of millions of people, even those living in remote places, to directly experience great literature and study leading educational textbooks. The implications are mind boggling for numerous reasons, but two stand out: First, millions of poor people, who would otherwise have had virtually no chance of acquiring such knowledge, will be able to lift themselves and their communities out of poverty. Second, the entire world will benefit not just because the number of people suffering from illiteracy and extreme poverty is reduced, but also because the knowledge-inspired creativity of millions of new readers will eventually enrich the entire human race.

 

Yet, even electronic books are too expensive for the world’s poorest people. That’s why I’m dedicating this blog to a remarkable person – my friend David Risher – who is intent on solving that problem. As one of the early driving forces in Amazon’s success story, David is ideally placed to leverage the power of technology especially as it relates to books. Using his formidable technological and entrepreneurial skills, and motivated by his empathy for humanity, David, with his co-founder Colin McElwee, set up the US and European charitable foundation Worldreader. Worldreader’s mission is simple: to make digital books available to as many children as possible in the developing world. In Sub-Saharan Africa alone, fifty percent of schools currently have few or no books. There’s no doubt that the challenge is huge, but so is the opportunity to make an enormous difference.

 

The process of making that difference is well underway. As of October 2012, Worldreader has distributed 229,000 e-books in three Sub-Saharan African countries. Many of those books are digitized versions of local literature and texts produced in cooperation with African publishers. Those works are important because children find texts from local publishers by local authors particularly engaging and can easily relate to the people and places in them. Furthermore, by discovering the best works by African authors, children learn more about their own histories and cultures.

 

The message of this blog is vital and urgent. Each of us has a unique and easy opportunity to make a huge impact on Worldreader’s work, as long as we act within the next two days. Here’s why: Worldreader is one of the nominated charities in American Giving Awards – the event hosted by NBC television and sponsored by Chase Bank. With your vote, Worldreader can win the one million dollar donation from the fund. It’s hard to imagine the difference that amount of money would make to the charity, but there’s no doubt that it would be game changing. So this blog is a petition. I’m asking you to go to the Worldreader homepage right now (http://www.worldreader.org/) and vote for this amazing charity. With just a click of your mouse you have the power to transform the lives of millions of children in the developing world. But please hurry; voting closes  Monday the 3rd of December.

 

Finally, I want to offer my thanks to David and Colin for giving us this once-in-a-lifetime opportunity to make an enormous and positive difference to the lives of so many children in under-developed countries – our less-fortunate fellow citizens of tomorrow.

p.s. Please share and encourage your family,friends and colleagues to take a moment out of their day and click.

Jeff Robinson

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T-h-a-n-k-s – The World’s Most Powerful Six Letters

I want to start this blog entry by sincerely thanking the many people, including my Facebook friends and blog followers, who wished me a happy birthday today.

On this day, 49 years ago, my parents brought me into this world and began the demanding task of nurturing me through childhood and adolescence until I was ready to stand on my own two feet. As I was growing up, although I didn’t take them and their love for granted, I certainly didn’t thank them enough for their unstinting, unselfish, commitment to me. Like most adults, I regret such youthful shortcomings. That’s why many years ago, I pledged that for the rest of my life I would regularly let them know how incalculably grateful I am for their loving, unflagging dedication, and hard work for which they wanted nothing in return, but my health and happiness. I’ve learnt many things since I became an adult, but one in particular stands out: gratitude costs nothing, yet it’s one of the most valuable gifts we humans can give each other. And it’s never too late to start giving.

 

Some words have the power to soften the hardest of hearts. It’s not surprising that they’re widely used. What is surprising is that they’re mostly used in ways that diminish their power. The word “thanks,” for example, is mostly delivered flippantly and with such little thought that by the time it’s received, it’s lost all of its magic. We mumble it to the waiter who brings us our coffee, or unthinkingly type it at the start of email replies. Yet, if we used it in a way that delivered all its potential, lives would be transformed.

 

“Sorry” is another magical word that is used frivolously – often, as an insincere ruse to get us off the hook. When used sincerely, those words convey the most powerful human feelings that can turn ordinary communications into empowering opportunities for the giver and receiver. The right words used honestly – especially ones that express appreciation of others – bring us emotionally closer and make the world a better place for us all; the right words may even help us live longer.

 

In one of the longest running socio-economic studies ever undertaken in the US – the Grant Study – researchers monitored the lives of 268 Harvard University students since 1938. The researchers gleaned an immense amount of information from this ongoing study, much of it unexpected. One significant finding was that those in the group who developed warm personal relationships – the kind where the magic of mutual appreciation is always present – had more successful, healthier and longer lives. Today, seventy four years later, over a third of those who were good at forming close relationships are still alive. Thirty one men in the group were identified as being unable to form intimate bonds. Only four of those men are still alive.

 

We’re surrounded by people who are hugely important to us – spouses, parents, children, and close friends – people whose relationship with us is so vital that it deeply affects our well-being. It’s crucial that we don’t take those relationships for granted; that we never let those special people doubt their importance to us and how much we appreciate them. It doesn’t mean, however, that intimacy is a vital element of a nurturing relationship. We constantly interact with people we regard as special in different ways, and expressing gratitude to them brightens their lives as well as our own.

 

Our most important job every day should be letting those special people know that we appreciate their contribution to our lives. It wouldn’t take much of our time, yet that’s not the way many of us organize our days. Often we’re driven by a sort of niggling mild stress that causes us to put any number of other activities ahead of the important ones: We rush off business reports, we pay bills, we dash to the supermarket for groceries, we browse the web for information on a new car, we read the news, we book a tennis game, we go to the gym. We need to slow down, and then set aside a few minutes each day to take care of what really matters long term: our special relationships. That may mean making a few five-minute phone calls, or sending half-a-dozen brief, but thoughtful, emails. Even well-considered text messages can work magic. Better still, knocking on someone’s door if we’re in the neighborhood, and saying “just buzzing by, but I wanted to say hi” can work wonders.

 

A world of mutual appreciation, where terms like “thanks,” “have a nice day,” and “sorry,” are heart-felt expressions of gratitude or well wishing, is an empowering, enriching and better place to live. So, to end this blog post, I’d like to sincerely thank you for taking the time to read what I have to say. I really appreciate your dropping by. Please come back soon; you’ll always be welcome here.

 

Jeff Robinson

Contrarian’s Mind

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News: the Good the Bad and the Ugly

 

I had a friend in college who was addicted to Coke and potato chips. Every night – studying or watching TV – he’d eat one bag of chips after another until he was too thirsty for any more. So, he’d quench his thirst with half a liter of Coke, feel pleasantly refreshed, and resume crunching chips. He’d keep this up for hours – one addiction feeding the other and both satisfying an unhealthy need.

 

Many of us have a similar addiction to bad news: The media feeds our insatiable need to hear about unpleasant things that could have happened to us, but didn’t. Media-delivered bad news is like the salty chips, and the confirmation that it applies to others and not us, is the Coke.

 

For much the same reason – that it rarely applies to us – we’re not very interested in good news, and that’s why the media reports so little of it. If we read in a newspaper the good news that ten of our neighbors were in a consortium that won the lottery jackpot, we’d probably feel happy for them, but at the same time, many of us might feel peeved for not being one of them. So for decades, the media had been dishing out bad news stories, and we’ve been greedily lapping them up.

 

Things are changing. After gorging on bad news for so long, we may finally be getting indigestion. According to Pew Research, fewer of us need a regular hit than ever before. There are two likely explanations. One is that in these uncertain times, there’s a limit to how much bad news we want, even if it’s all about other people; the second is that maybe we never really wanted so much of it in the first place, but accepted it from the traditional media because we had little choice. Whatever’s the reason, much of the traditional media have been taken by surprise and are now obliged to watch helplessly as readers, viewers and listeners drift away.

 

Two important developments of recent years are contributing to that drift. The first is the Internet. As a result of the Internet, an ever-increasing number of us now get our news online from a wide range of sources, none of which we feel any great loyalty towards. In addition, we’re choosing quite different material from the kind the traditional media headlines.

 

The second is the economic slump. In times of widespread crises, continuous bad news adds to the pervasive sense of gloom. The current global economic problems touch so many people’s lives with high unemployment, reduced pensions, depleted savings, collapsed property values, etc., that news of them is no longer just about other people’s difficulties, but also about our own, or those close to us, and few of us like constant bad news that’s too close to home.

 

Both those changes have caused a paradigm shift, which much of the traditional media has yet to come to terms with. Many of us now get customized news whenever we want it from aggregation services like Google News, social media and RSS feeds not just because it’s simple with smartphones, tablets, laptops and Internet-enabled televisions, but also because we can filter out the kind of news we don’t want. And it seems – at least in the current climate – that most of us are choosing more positive news over the negative kind the traditional media delivers.

 

Yet, whatever way this story unfolds, the fate of the traditional news media will affect most of us. Their valuable assets – the retinue of highly skilled foreign correspondents who scour the world’s hotspots, the dogged investigative journalists who unearth corruption wherever it lurks, and the expert opinion writers, whose engaging prose helps us see the world from a fresh perspective – are expensive to employ. If shifting customer preferences force their employers to slash services, many of these professionals will lose their jobs, and we could lose the easy access to invaluable resources we’ve always taken for granted.

 

Despite the unavoidable news media shakeup, however, I believe that the changes will be positive; that in a few years, when the dust has settled, the new paradigm will showcase and provide easy access to the best output of those journalists and columnists. Many will be freelancers then, probably working through online journalism agglomeration sites that will syndicate their output to different platforms. It’s already happening with blogs, many of which attract large numbers of followers by featuring the work of top-class writers and journalists. I’ve no doubt that we can look forward to great journalism for years to come, and more of it will be positive than has been the case up to now. In short, I believe that the future of news will be good news.

 

Jeff Robinson

Contrarian’s Mind

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