Matt Taibbi is angry. He is a Rolling Stone columnist who spent the last several years covering the financial crisis, and as an outside observer, is far more negative about the finance industry than anybody associated with it. Griftopia is a collection of columns and other research put together as a striking condemnation of what has happened to America in the last twenty years.

Taibbi’s main thesis is that the finance industry has, rather than produce real value, chosen to exploit value created by others by creating financial instruments. He digs into the mortgage crisis, the commodities bubble, urban privatization and health care and shows how these are all different facets of the same attitude – make a quick buck for yourself, and damn the long-term consequences. I don’t know if all of Taibbi’s allegations are accurate, but he strings his observations together into a compelling story of a country headed into oblivion, because we are letting these jerks get away with it.

Here’s Taibbi’s description of the bubble economy:

Imagine the whole economy has turned into a casino. Investors are betting on oil futures, subprime mortgages, and Internet stocks, hoping for a quick score. In this scenario the major brokerages and investment banks play the role of the house. Just like real casinos, they always win in the end – regardless of which investments succeed or fail, they always take their cut in the form of fees and interest. Also just like real casinos, they only make more money as the number of gamblers increases: the more you play, the more they make. And even if the speculative bubbles themselves have all the inherent value of a royal flush, the money the house takes out is real. … Bettors chase imaginary riches, while the house turns those dreams into real mansions.

Now imagine that every time the bubble bursts and the gamblers all go belly-up, the house is allowed to borrow giant piles of money from the state for next to nothing. The casino then in turn lends out all that money at the door to its recently busted customers, who flock back to the tables to lose their shirts all over again. The cycle quickly repeats itself, only this time the gambles is in even worse shape than before; now he’s not only lost his own money, he’s lost his money and he owes the house for what he’s borrowed.

Taibbi shows how this played out in the subprime mortgage crisis, but also in several other areas:

• Commodities trading used to be about hedging risk, where a corn farmer could lock in a guaranteed price at market. The government used to enforce position limits, to ensure that “the trading on the commodities markets would be dominated by the physical hedgers”. However, in the 80s and 90s, the government issued exemptions to those position limits to several banks like Goldman Sachs, leading to 2008, when “80 percent of the activity on the commodity exchanges was speculative”. Instead of creating and maintaining real value from real crops, the commodities market became just another casino. This played into the oil price craziness of 2008, which exacerbated the slide into recession.

• He also tells the story of how Chicago leased its parking meters for 75 years to an Abu Dhabi coalition for a lump-sum payment to cover a budget deficit – they essentially securitized the parking meter income stream. The downside was that the new lessors immediately raised prices and extended the meter schedule to start making a lot more money than originally projected in the lump sum payment, and left Chicago in worse shape than when it started.

Taibbi uses several more examples to demonstrate that Wall Street is a parasite getting fat by sucking profit out of others. It’s a short-term attitude that destroys value, rather than create value by producing goods and services. He ends the book by describing Goldman Sachs as a “vampire squid”, entwined with every aspect of the American economy and sucking value out of all of it without creating any value itself.

Griftopia is a withering tirade against what Wall Street has done to the American economy, and how the government and we, the people, have allowed it. It’s a quick read, and I recommend it for a different perspective on the recent financial crises than what is reported in more typical news channels.

Subtitled “The Rise and Fall of Information Empires”, Wu has no lack of ambition as he addresses how information and communication companies such as AT&T, Paramount Studios, NBC, and CBS have dominated our discourse over the past century. The title comes from a quote illustrating the perils of such domination: “At stake is not the First Amendment or the right of free speech, but exclusive custody of the master switch.” (Fred Friendly). When a single company can determine what innovations are pursued or whose message gets transmitted, it has potentially negative consequences on our society.

The book is primarily a history of the telecommunications industry in the twentieth century, as Wu examines how each new technology innovation (telephone, radio, movies, TV) arose in a spirit of changing the world, before eventually getting subsumed into a monopoly or oligopoly, created with the tacit assistance of the government, either through regulation or patent enforcement. Wu calls this “the Cycle”, and the underlying question of the book is whether the Internet will be subject to “the Cycle”, or whether this time is different. I thought that Wu had to stretch to make the case that each of these industries followed the same pattern, but it was interesting to me to read the history of each of these industries, as there was much I didn’t know.

I liked how Wu demonstrated how technology innovation was never enough to up-end an industry. Because of the nature of innovation, several independent inventors often came up with the next step at roughly the same time (e.g. Alexander Graham Bell is known as the inventor of the telephone, but Wu points out that Elisha Gray, Johann Reis and Daniel Drawbaugh also had created primitive telephones, or the various number of people who invented television). The difference in the one that we remember as the inventor is that he partnered with a business person who ruthlessly pursued the goal of creating a company based on the invention (e.g. Theodore Vail creating AT&T based on Bell’s work, or David Sarnoff creating NBC by undermining Philo Farnsworth). There is a myth of technological determinism in Silicon Valley, that the right technical innovation “naturally” becomes the dominant one, but Wu’s book shows how the right business strategy (and good timing) is also necessary.

Another good insight was the natural tendency of these telecommunications technologies to centralize because of economies of scale. Once AT&T had a set of long-distance lines in place, it was prohibitively expensive for anybody else to lay lines, so the government essentially traded AT&T a monopoly in exchange for providing universal telephone service. Once media industries realized the potential of advertising, the nationwide networks had a huge advantage in that they could spread their costs over much larger audiences. And even though AT&T was broken up into AT&T and the Baby Bells in the early 1980s, the tendency towards centralization has been demonstrated as those Baby Bells have now merged and re-merged until there are only two descendants of AT&T, the re-formed AT&T in the west, and Verizon in the east.

The centralization of these industries also deterred innovation, as the companies involved didn’t want to risk the (massive) income stream that they already had. For instance, while AT&T, and particularly Bell Labs, was the source of many great innovations including the transistor and UNIX, the company also squashed anything that might threaten telephone usage. Wu tells the story of Clarence Hickman, an AT&T engineer who created an answering machine with magnetic tape audio recording… in 1934. The technology was buried, and magnetic tape recording would only be discovered decades later. Why? Because AT&T worried that the ability to record a conversation might keep people from using the telephone and “render the telephone much less satisfactory and useful in the vast majority of cases in which it is employed”. The story of the Hush-a-Phone is also instructive, where AT&T sent dozens of lawyers after an independent inventor who dared to create a phone attachment to keep one’s conversation private. Insane in retrospect, but once a monopoly is created, its primary purpose is to perpetuate its monopoly and therefore eliminate any potential threats.

Another danger in creating such centralization is there becomes a single point at which pressure can be applied to restrict communication. For instance, I had known about the “Hays Code”, which prevailed from the 1930s to the 1950s, and ensured that only “moral” things could be shown in movies. I had always assumed that was a law or regulation. Instead, what happened was that a “Legion of Decency” threatened to boycott any theater that showed “immoral” movies. The movie industry by that point had been concentrated into the few studios that still dominate today (Paramount, Warner Brothers, Universal and Fox), and those studios had full vertical integration, owning everything from the production to the distribution to the theaters where the movies were shown. All that the “Legion of Decency” had to do to get its way was convince the CEOs of those few companies that their profits would be threatened by boycotting the theaters. So a “code” that could never be passed into law due to the First Amendment was allowed to censor the industry for three decades until the vertical integration of the movie industry was broken up such that “the studios lost control over what the theaters showed”.

As can be seen, Wu has concerns about “the Cycle” with respect to telecommunications and media industries. Such industries tend to centralize quickly into one or a few companies that create efficiencies by monopolizing the industry, but that same centralization also has deleterious consequences for innovation and free speech in our society. In today’s world, we face similar questions about net neutrality (whether Verizon or Comcast can decide which content goes over its wires) and openness (the openness and chaos of the Google Android system vs. the closed but polished iPhone system from Apple), and Wu hopes that we can learn from history to make better decisions today.

Wu’s proposal is to create a “Separations Principle” that would prevent the development of vertically integrated companies in these industries. “It would mean that those who develop information, those who own the network infrastructure on which it travels, and those who control the tools or venues of access must be kept apart from one another.” If each layer of the information economy was kept separate, Wu believes that the dangers of concentration would be minimized, as innovations in one layer would not be suppressed to continue the dominance in another layer. Wu defends it as being a less subjective principle than antitrust, which has been the only tool to use against such companies to this point. I’m not sure I entirely agree with his premise, but I do think some clear guidelines on what kind of integration makes sense will be useful. And since he recently took a position as a senior advisor at the Federal Trade Commission, he will have the chance to make such recommendations. It will be interesting to see what happens.

I recommend this book if you’re interested in these sorts of issues. While Wu falls short in his attempt to draw together the overarching narrative of “the Cycle”, I appreciated the chance to learn more about the history of the telecommunications and media industries in an easy-to-read form.

• Ender’s Game and Speaker for the Dead, by Orson Scott Card – yes, it’s trite for a nerd to like these books, and Orson Scott Card’s real-life kookiness makes it hard to support him, but the description of Ender articulated a couple attributes that became long-standing goals of mine. In particular, I love the description of Ender as being somebody who can see right through other people and understand their motivations and their approach to the world, and that’s a skill I continue to work on (although the most interesting people regularly surprise me).

  I also love this quote from Xenocide about Ender as it expresses how I tend to interact with the world, evolving my thinking on a regular basis.

  “Thousands of competing contradictory impossible visions that make no sense at all because they can’t all fit together but they do fit together, he makes them fit together, this way today, that way tomorrow, as they’re needed. As if he can make a new idea-machine inside his head for every new problem he faces. As if he conceives of a new universe to live in, every hour a new one, often hopelessly wrong and he ends up making mistakes and bad judgments, but sometimes so perfectly right that it opens new things up like a miracle and I look through his eyes and see the world his new way and it changes everything. Madness, and then illumination.”

  These books have been long-standing in their influence on my thinking – even fifteen years ago, I was writing about how Card’s view of communities influenced me and how his views on the importance of story-telling were a big part of my worldview. Heck, Ender’s Game even influences my ideas about how to manage people.

• Phil Agre’s red-rock-eater mailing list. Long since discontinued (Agre disappeared off the grid a couple years ago), but reading it in the late 90s and early 2000s introduced me to critical thinking about science and technology and how those subjects interacted within the larger culture. It led me to The Social Life of Information, by Duguid and Brown, which was one of several books to open my eyes to how we depend on others to learn. It led me to Sorting Things Out, by Bowker and Star, which blew my mind with the subjectivity of classification systems, and that book led me to Bruno Latour, who continued to blow my mind for a decade. Speaking of which…
• Bruno Latour – reading The Politics of Nature changed how I see the world by describing how all of our structures (social, technological and physical) are contingent and reflections of how the world was perceived when the structures were built.
• Language in Thought and Action, by S.I. Hayakawa – great introduction to semantics and how language influences how we think about the world
• George Lakoff, who convinced me that political opinions are dependent on worldviews that can’t be influenced by facts. Therefore, making a difference in politics isn’t a matter of argument or explanation, but instead a matter of tactical ingenuity to exploit the existing system, which is less interesting to me. There is still an element of message management I find interesting (e.g. “Yes we can”), but between Lakoff and the disappointment of volunteering in the 2004 election, I pretty much gave up on paying attention to politics.
• James Carse, particularly his book Finite and Infinite Games, which gave me a vocabulary to separate out activities designed to change the world from those that exploit the existing state of the world.
• The User Illusion by Tor Norretranders and Sources of Power, by Gary Klein, which both do a good job of explaining that most of our brainpower is in the unconscious mind, which has to be trained to take cognitive load off of our limited conscious capacity.
• Buffy the Vampire Slayer (the TV show) – the first TV show I watched obsessively, the first one I paid attention to that built a complex enough universe to reward multiple rewatchings, the first one that I read literary criticism about, the one that drove me and a friend to create the alt.tv.buffy-v-slayer FAQ. Buffy gave me an idea of what good TV could do, and I’ve spent most of the past decade watching too much TV trying to recapture that initial experience.

I could go on and on, especially once I started trolling through the book reviews I’ve put on this blog, but that’s enough for now. Also, man, looking at all those old reviews reminds me I need to make more time for reading – I haven’t done any serious reading in months!

Of note is that almost all of these books are from the library. The Mountain View Public Library is a wonderful library, and the convenience of their bookmobile visiting Google once a week has changed my book habits. Instead of ordering things through Amazon, I send an email to Cody to put a desired book on the truck for me, and it shows up on Wednesday. Magic! It also means I read a lot more genre fiction, as I wouldn’t pay to buy these books, but if they’re free from the library, I’ll indulge myself and read whole series.

Normally, I’d link each title to Amazon, but there’s way too many to deal with that, so if you choose to buy one of these, please click on the Amazon link in the left sidebar, or just click here, to give me the referral fee.

Free Food for Millionaires, by Min Jin Lee

I’m not sure where I saw this recommended, but it was a book about Koreans and New York and Wall Street, so it appealed to me. I enjoyed the specificity of the New York setting, and the cultural aspects of Koreans attempting to adapt to American culture. However, the book is more of a meditation, as the characters wander and aren’t particularly memorable, while the plot is vague at best. I also thought the writing was inconsistent, as each chapter had a different character’s viewpoint (written in third-person), but would drop into a side-character’s head for a couple paragraphs to make a comment.

Seconds of Pleasure, by Neil LaBute

This is a book of short stories by Neil LaBute, who’s better known for his cynical plays and movies, such as In the Company of Men, The Shape of Things, This Is How It Goes, etc. While I appreciate his bitter viewpoint, a whole book of short stories that each describe how miserable we are was a bit much – I think I only read about half before returning the book (a bonus of library books – not feeling guilty for not finishing a book!).

Downtown Owl, by Chuck Klosterman

I’m a big fan of Klosterman’s essays, so I thought I’d pick up his first novel from the library. I enjoyed it – I thought it was DFW-esque in its digressions into social observations from side characters. It wasn’t particularly plot-driven, instead observing various characters wandering around a town in North Dakota. Not a book I’d read over and over again, but happy to have read it once from the library

The Time Traveller’s Wife, by Audrey Niffenegger

One of those books that everybody’s read, and I finally got around to last fall. I slammed through it in a couple days because it was due back at the library. No particular lasting impressions, though.

Bad Monkeys, by Matt Ruff

I picked this up based on Seth Godin’s recommendation after enjoying the previous novels he’d recommended. It wasn’t until after I got this from the library that I realized I’d read Matt Ruff’s Sewer, Gas and Electric, which was seriously weird (there was an animatronic head of Ayn Rand). An enjoyable romp that I slammed through – it’s told in a locked-room style with flashbacks, and weird stuff starts happening, but it’s unclear whether that’s what happened or whether it’s an unreliable narrator. Plus the idea that a secret organization exists to cull the “bad monkeys” from the human race is pretty sweet. Recommended as fluffy relaxing reading.

Beat the Reaper, by Josh Bazell

Another Seth Godin recommendation, this one’s about a Mafia hit man turned doctor whose new life is interrupted when one of his old colleagues happens to show up for treatment at the hospital where he’s serving his residency. Hijinks ensue. Again, well-done fluffy entertainment.

Twelve Sharp

Lean Mean Thirteen

Fearless Fourteen

Finger Licking Fifteen, by Janet Evanovich

A frothy mystery series that I enjoy. Happy to get them from the library rather than buying each one, though.

Another Life, by Andrew vachss

I am a huge fan of the early books in Vachss’s Burke series, but this one (maybe the final one?) was completely unmemorable, so I was glad I got it from the library.

The John Rain series, by Barry Eisler

Rain Fall, Hard Rain, Rain Storm, Killing Rain, The Last Assassin, Requiem for an Assassin are the books in the series. John Rain is a half-Japanese hit man who specializes in killing people such that it appears they died of natural causes. He’s also a general all-around bad ass with weapons and martial arts. A friend recommended the series to me as being more realistic in its fight sequences than most thrillers, as Eisler is a former CIA operative with a black belt. I obviously can’t judge the realism, but it was definitely a good read, and the tactics felt real. Obviously, I enjoyed the series since I went ahead and read all of the books, but I don’t know if they’d be worth buying.

Fault Line, by Barry Eisler

The start of a new series by Barry Eisler, but many of the same characteristics. This one was set in the Bay Area, so it was fun for me to know all the places referred to. New protagonist, but set in the same universe as the John Rain series, as there are a couple throwaway references to events that happened in those books. I’ve already requested the sequel at the library even though it has not yet been released.

The Girl with the Dragon Tattoo

The Girl who Played with Fire

The Girl who Kicked the Hornet’s Nest, by Stieg Larsson

Recommended by the Economist, the Millenium Trilogy was written by a Swedish journalist and is set very specifically in Sweden, with lots of references that I didn’t get. But it’s an enjoyable read over the course of the three books, as the titular girl (a borderline sociopath genius with a photographic memory) gets caught up in crazy situations and has to fight to survive. Some of the best moments are her trying to cope with normal social conventions, though; in fight-or-flight scenarios, she knows how to react, but like a stray cat, she doesn’t quite know how to deal with kindness, sometimes welcoming it, and other times spurning it. Page-turning reads – I think each of these ate a weekend day at some point where I started the book and then had to keep reading to find out what happened. Also, the first book just got released as a movie here – I might wait for it on DVD, though.

Killing Floor

Die Trying, by Lee Child

Another recommended thriller series starring Jack Reacher as an ex-military-police bad-ass who ends up in crazy situations as he wanders the country. He’s a bit too indestructible, as he’s just superior at all miiltary skills (in the second book, it’s a plot point that he was a better sniper than the best of the Marines), so it’s not too interesting as you know he’s going to win. But the twists on the way there are tolerably diverting. I might pick up another book in the series (there are apparently 14) when I need something totally mindless to read.

Anathem, by Neal Stephenson

I actually bought and read this in September of 2008, in the two weeks of downtime I had after moving to California but before starting at Google. I enjoyed this much more than I expected, given that I had skipped the Baroque Cycle and didn’t think that much of Cryptonomicon. Also, the book started with a character using lots of made-up words, and that always drives me nuts. But after a slow start, the plot builds in interesting ways, and ended up in a place far different than what I expected. I liked the world that Stephenson built, and even his trademark philosophical ramblings were interesting. Thumbs up.

Revelation Space, by Alastair Reynolds

I’ve seen this on several friends’ bookshelves, and finally got around to reading it. It is high-concept science fiction, intricately plotted to bring several plot strands together at the end, with technical jargon to make things seem different. I did not find the characters particularly compelling – the resolution felt more like chess pieces being moved into the necessary positions for the plot, rather than seeming like an inevitable consequence of the characters being who they were.

Old Man’s War

The Ghost Brigades

The Last Colony

Zoe’s Tale, by John Scalzi

Jofish recommended the first book in this series as a decent sci-fi diversion, and I went ahead and read through the rest from the library. I think calling Scalzi the new Heinlein, as the blurb does, isn’t quite justified, but he comes up with an interesting concept, and explores some of the consequences. Plus, it’s a fun, quick read, and that’s all I ask of my diversions.

Breakpoint, by Richard Clarke

I saw some recommendation of this as an insightful look into the future of security, from a former security expert in the government. Alas, it was really lame. The technical threats were all overblown (it sort of felt like the annoying news stories that say a crime was committed “with the Internet!”), and the characters were paper thin. Lame.

Daemon

Freedom, by Daniel Suarez

I think I first heard of Daemon when Suarez was asked to speak at the Long Now talks, as I’m a fan of those. I finally got around to reading Daemon and its sequel Freedom from the library recently, and they’re pretty good. He takes current trends and projects them forward in logical but unnerving directions. Plus, the posited technology, especially in Daemon, is super-slick. Nothing that is out of the realm of possibility even today, but some pretty sweet extrapolations. And it combines with a rollicking good story. The only weakness is that the characters are fairly thin, but I barely noticed as the plot rocketed along. Worth a read.

Makers, by Cory Doctorow

Another Seth Godin recommendation, although I’ve read another of Doctorow’s books before. Some interesting thought went into this one, as Doctorow digs into what a free-for-all society might look like where anything can be manufactured ad-hoc. I enjoyed the extrapolations and where an Instructables society might end up.

The Twelve Houses series, by Sharon Shinn

Mystic and Rider, The Thirteenth House, Dark Moon Defender, Reader and Raelynx and Fortune and Fate are the books in the series. I had mostly liked Shinn’s Archangel world, so gave Mystic and Rider a try and liked it enough to plow through the whole series. Fantasy world, magic, warring factions, romance, etc. Not fantastic, but tolerably diverting, and I really liked the main characters. In fact, I’ve picked up a couple of these from the used book store, and they’ve been added to my comfort book rotation.

Dzur

Issola

Jhegaala, by Steven Brust

I love the Jhereg series, and own the first several, but the last few have been less memorable, so I was happy to get them from the library.

100 Bullets, by Brian Azzarello

Y The Last man, by Brian K Vaughan

Maus and Maus II, by Art Spiegelmann

Black Hole, by Charles Burns

Another awesome thing about the Mountain View Public Library is that it stocks graphic novels. All of these were series I’d heard recommended at one point or another, and I finally got around to reading them when I didn’t have to pay for the privilege.

Not much to comment on the last few and I’m running out of gas here, so I’m just going to list them for my own reference.

The Name of the Wind, by Patrick Rothfuss

Foreigner, by C.J. Cherryh

The Return of Santiago, by Mike Resnick

Swordspoint, by Ellen Kushner

Coraline, by Neil Gaiman

Good grief, that’s nearly 50 books read in the last year and a half. Not counting the non-fiction books, which is another couple dozen or so. Or the TV shows I follow. Or the DVDs I watched from the library or Netflix. I guess I know what I was doing with my free time now

Trade-Off is a book which explores a simple, but useful, way to frame the world. Kevin Maney plots products along two dimensions, fidelity and convenience, and then spends the rest of the book discussing how products end up in different places on that graph, from the “fidelity belly” to the “fidelity mirage”

Fidelity is essentially quality – what makes a product unique or an experience. Examples include luxury goods that identify the owner as a person of taste, or live rock concerts where the sheer sensory overload is unmatchable by one’s stereo.

Convenience is, well, convenience – how easy it is to get the product. This includes both physical convenience as well as cost – places like Wal-Mart aim to maximize convenience by being a one-stop shop with the lowest prices.

Maney makes a few key points:

• There is always a trade-off between fidelity and convenience. Trying to position the same product as being the highest quality as well as the most convenient is oxymoronic (one of his interviewees quips that “A successful business is either loved or needed.”). He calls this the “fidelity mirage” where a company attempts to maximize both dimensions at the same time, which generally leads to failure in the marketplace.
• The products that win pick a dimension to maximize and stick to it. Either they aim to be the high-end of the market, like Apple has with the iPhone, or they aim to be the commodity provider, like Wal-Mart. Being clear about where a product is positioned is essential to success.
• Products that fail to distinguish themselves along either dimension end up in the “fidelity belly”, neither high enough quality to distinguish themselves, nor convenient enough to compensate for the perceived lack of quality.
• One useful observation was that technology continually expands the boundaries of the “fidelity belly”. The feature that made your product unique and special a year ago will get copied by your competitors and is no longer a distinguishing characteristic – the fidelity advantage has been lost. Similarly, a supply chain innovation that enabled lower prices can also be copied, losing the convenience advantage. Companies must keep innovating to stay ahead of their competitors, and only by staying focused on one dimension can they outrace the “fidelity belly”.

That’s basically the whole book right there. He tells a bunch of stories about how companies succeed or fail framed with this viewpoint, but you get the idea.

The book was a good reminder about the importance of focus and positioning; understand where you can get a step on your competition, and then find ways to maintain or extend that lead. The same applies to personal positioning, as Maney mentions in an epilogue. All in all, it was a quick read from the library, but I can’t particularly recommend it.

P.S. Jim Collins, the Good to Great author, wrote the introduction, and had a nice paragraph explaining the value of finding new mental models as tools:

A strategic lens … does not in itself give an answer about what you should do, and not do. Rather, and much better, it forces you to engage in a powerful question, from which you derive your own insight and make your own decisions. If you engage your team in a vigorous debate stimulated by the questions that naturally arise from the ideas in these pages, you will gain deeper understanding not just of what you should be doing (or not) but, even more important, why. The power of a strategic concept lies first and foremost in giving us a lens and a stimulus for hard thinking and hard choices. The critical question is not its universal truth, but its usefulness.

I picked this up from the library, as yet another in the recent series of books I’ve been reading that reinforce my own biases. Overall, I liked it – I knew most of the patterns in cognition that the book describes, but it summarized them nicely with good anecdotes.

One standard model of decision-making is that we are rational beings. We examine all of our options, we think through the consequences of making a decision, we weigh the costs and benefits, and then we decide. Philosophers like Descartes think that this rational mind is what separates us from other species (“I think, therefore I am”).

Another model is that of the unconscious mind, as popularized in recent books like Sources of Power and Blink. The theory here is that our brains have evolved over millenia to have an enormous amount of processing power that is not consciously accessible, and sometimes we have to trust the “intuition” that the unconscious mind is giving us.

Lehrer’s book reviews the strengths and weaknesses of each of these cognition models to help people understand when it’s appropriate to use each model.

The rational conscious mind is limited in power – we’ve all heard the idea that we can only keep 7 information nuggets in our brain at a time. It’s a bandwidth-limited single processor (one estimate is that it processes at 20 bits/second). Its strengths are that it can logically process new situations, override our kneejerk impulses that may not be appropriate to the situation, and come up with responses that have not been tried before. Also, decisions made using the rational path are easy to explain, as they are based in logic. Its weaknesses are that it is slow and has limited capacity (check out his anecdote on self-control when trying to remember too many things), and therefore works best on well-defined problems with only a few dimensions to consider.

The unconscious brain is in many ways the opposite of the rational brain. It is a parallel processor with enormous capacity that can optimize decisions among many conflicting dimensions. It is also extremely fast – it works by training neural circuits to recognize previously seen situations and respond quickly without involving the conscious mind. When we are developing our 10,000 hours of expertise, we are building the necessary neural pathways in the unconscious brain (what Daniel Coyle says are myelin sheaths).

However, the unconscious brain does not deal well with novel situations, as it may seize on an already-trained, but inappropriate, response. It is also unreliable in situations where previously seen inputs have different outcomes because the training doesn’t work – Lehrer cites slot machines as an example of the unconscious brain desperately trying to find patterns when none exist. One final weakness is that the decisions made by the unconscious brain are difficult to explain, as they are expressed through emotions we feel and so we can’t analyze the decisions rationally.

Lehrer describes many situations when the two minds are used inappropriately. For instance, complex multivariable problems can not be answered by pure reason (Lehrer cites the example of a man who lost his emotional capacity after a brain tumor was cut out, and was completely unable to make normal life decisions). In fact, if we try to attack such problems with the rational brain, we make poorer choices because we seize on variables that are easy to explain rationally rather than considering all of the possible benefits (Lehrer cites an amusing study where undergrads had to choose a poster to take home; those that had to give a reason for choosing a poster ended up choosing posters they were less happy with compared to the ones that just chose a poster). Lehrer suggests that the best strategy when confronting a complex decision with many variables is to study it carefully to load all of the information into our unconscious brain, and then go do something else (take a walk, go for a driver) while the unconscious brain processes that information. This idea is reflected in the standard trope that the best ideas come in the shower.

However, the unconscious brain only works well in repeatable situations where it can try out different responses to the same set of inputs and encode what works into the neural pathways. In novel situations, we can’t trust our instincts and have to slow down and engage the conscious brain. Lehrer tells the story of a team fighting a forest fire when the wind shifted unexpectedly and came towards them. The leader realized the fire was going to overtake him before he could get to safety, stopped running, thought for a second, and then set his own fire to create an already burned spot, which he then stepped into so that the forest fire would go around him. Most of his team was lost because they were only listening to their emotional brains telling them to run from the fire.

I liked the book’s balance between the “Blink” theory of trust your instincts and the “Descartes” theory of following reason. Both methods of cognition have advantages and disadvantages, and the best decisions will be made by taking those strengths and weaknesses into account. In some sense, the two brains are mental tools, and it’s up to us to understand when it’s appropriate to use each tool.

I have been a fan of Grant McCracken’s for several years now, so I was eagerly awaiting his new book, Chief Culture Officer. Note that I may be slightly biased in this review, as Grant mentions me in the book as a potential CCO candidate.

Chief Culture Officer is McCracken’s manifesto of how and why culture matters to the corporation. He starts the book with stories like Levi’s missing a billion dollar opportunity in the mid-90s because they didn’t see the hip-hop trend and therefore didn’t understand why anybody would want baggy jeans. Another example is Steve Jobs revolutionizing industry after industry by leading a new wave of culture e.g. using iTunes and the iPod to create an individual song a la carte option in the music industry so people could create their own mixes. Or Geoffrey Frost at Motorola creating an enormous amount of value with the Razr.

McCracken then dives into several of the trends that have been taking place over the last few decades:

• Culture fast and slow – fast culture is the bleeding edge, particularly notable in the fashion and design industries where “that’s so five minutes ago” is a meaningful insult. Slow culture is represented by less flashy, more subtle trends, like how we think about our food, or how homes are changing to reflect updated needs.
• Status and cool – status is Victorian and high culture – it’s about aspiring to the One True set of status indicators like the luxury car, an appreciation of art and opera, etc. Cool is represented by outsiders such as the beats – it’s doing what the hip kids are doing rather than conforming to society’s expectations. I liked McCracken’s observation that the two trends, at odds throughout the twentieth century, have now fused into an interesting hybrid where “cool” avant-garde liberties in personal expression are eventually co-opted into the social order of “status” (shades of learn and latch).
• Producers and consumers – the age of mass media was about few producers and millions of consumers. We have moved towards a many-to-many fragmented culture, as everybody now has the tools of production. That changes our entire relationship to media, both as producers and consumers.

One insight I particularly liked was that “Convergence culture is fleeting. But it supplies order, and for the CCO this order is a gift”. Seeing the right cultural trend splits the world in a useful way and illuminates events by giving a framework through which to view them. It gives us a meaningful story by which we can interpret what’s happening, and testable hypotheses as to what will happen next. McCracken suggests we should be tracking the trends that we think are happening and revisit those predictions, so that we can learn from our mistakes (I would note that blogs are a particularly good way to track such thoughts).

How does the CCO figure out which are the next meaningful trends, and which are fads that will fade away? They need to monitor magazines, TV shows, internet forums – one person can’t do it all, so how do we collaborate? McCracken suggests having a group of advisors/editors who can collectively share tidbits (I would suggest that Twitter can be useful for this purpose if following the right set of people). And once potential trends of interest are identified, how do we convert those into actionable insights? McCracken suggests that the CCO needs to champion efforts in the corporation that catch the rising wave, and fight back against the ones on the subsiding ones.

Another insight I liked was the corporations breathe culture in and out – “the corporation is not just an economic actor, it is also a social and a cultural one.” Brands are not imposed on people; instead, brands only derive meaning from how people incorporate brands into their self-story. Brands must spark a recognition within the consumer that the brand is a meaningful expression of identity. For instance, cars are a quintessential expression of identity, ranging from muscle cars, hybrids, or minivans. In this vision, brands that aren’t co-opted and multiplied by their users wither away and die.

McCracken finishes up with a chapter on the nitty-gritty of how to observe and monitor culture, including an appendix with “A Tool Kit for the Rising CCO”, which includes recommendations for magazines, TV, events, people, books, etc. His ethnographic perspective emphasizes the act of noticing, both observing a behavior and then explaining it with a story. Part of the challenge of noticing is keeping an open mind. If you go in with an opinion, you’ll fit your observations into that opinion – you have to pay attention what is actually happening and willing to follow up on surprising inconsistencies. The ethnographer is actively engaged, “capturing how and why the assumptions in this life go together, or feel they do”.

I like McCracken’s premise that understanding cultural trends is vital to corporations that want to act effectively in this world. And as usual, I love his insights into our culture – he provides useful stories for understanding what is going on around us. This is the kind of book that is easy to read, but has meaning that is only slowly percolating into how I think. Good stuff.

P.S. As mentioned previously, McCracken is holding a Chief Culture Officer Boot Camp this Saturday in New York. I’m excited to attend, and will report back with my notes and observations afterwards.

Dan Pink’s book Drive was good, so I also picked up this book from the library, subtitled “The last career guide you’ll ever need”. It’s written in the style of manga (Japanese comics), and can be read in half an hour, but offers solid advice on career management.

Here are the bullet points it hits:

1. There is no plan – don’t assume that if you do what everybody tells you to do that it’ll work out. Nobody’s responsible for your career but you.
2. Think strengths, not weaknesses – trying to fix weaknesses is a never-ending process, so focus on building strengths into world-class abilities instead (the book specifically calls out Marcus Buckingham of “Now, Discover your Strengths”, and Mihály Csíkszentmihályi of “Flow”).
3. It’s not about you – help the people around you, both managers and coworkers, achieve their goals.
4. Persistence trumps talent – given my recent posts, I don’t think I need to add anything there.
5. Make excellent mistakes – avoiding mistakes means you aren’t stretching yourself – have high aspirations and make big mistakes, and then learn from the mistakes. It’s the deep practice concept in another form.
6. Leave an imprint – do something that matters (another way of asking “What’s your sentence?”).

I thought it was a cute idea that took some standard career advice mantras and made them seem fresh by presenting them in the new form of a graphic novel. Not a ton of depth, but I enjoyed the quick read.

I’ve liked Po Bronson’s other books, like What should I do with my life?. I also really liked his New York magazine article called The Power (and Peril) of Praising Your Kids, which described Carol Dweck’s research into the fixed vs. growth mindset of children, and what a tremendous difference it made to praise effort rather than innate ability. So I’ve been meaning to read this book, which summarizes several similar topics (the praise article is the first chapter), and finally got it from the library a couple weeks ago.

The book covers several topics where common parenting assumptions do not match what science has learned over the past couple decades. The praise chapter describes how self-esteem is actually undermined by trying to build it up. There is a chapter on how squeezing in more activities and studying harder is causing kids to lose sleep, which has startling impacts on health and even intelligence (an hour of sleep a night separated A students from D students). Other chapters cover questions about race, honesty, the pace of cognitive development in children, self-control, and socialization.

One particularly non-intuitive point for me was that “to an adolescent, arguing is the opposite of lying”. Parents hate arguments, finding them stressful, disrespectful and destructive, and don’t appreciate their kids questioning their judgment. The interesting result was that kids that respect their parents are the ones most likely to argue with them – the rest “just pretended to go along with their parents’ wishes, but then they did what they wanted to do anyway”. In other words, parents that shut down conflict and argument ended up promoting lying because the kids didn’t feel bound by arbitrary rules that made no sense to them. But when the kids were allowed to have their say, and where parents could explain why the rules made sense, then the kids could be honest and ask for what they wanted, rather than feeling they had to lie and work around the rules. As an aside, substituting manager and employee for parent and kid in this paragraph illustrates the connection between management and parenting (in case you were wondering why I’d be reading a parenting book).

I think NurtureShock is a nice summary of interesting results from the new “science of kids”. I don’t know if there are any mind-blowing revelations, but I’m definitely questioning my instincts about praise and other topics as a result. I recommend going and checking out the list of all posts and articles the authors have published on the subject, including links to the articles listed above and many others, to see if you’d be interested in the book.

A coworker recommended this to me, and was even kind enough to lend it to me for the weekend.

Coyle asks the question: where does talent come from? Is it nature (genetics) or nurture (environment/opportunity)? He started by visiting several talent hotbeds – the Russian tennis academy that spawned Marat Safin and Elena Dementieva, the Curacao Little League baseball team that has been consistently reaching the world semifinals, the soccer fields where Brazilians train – and constructs a thesis around what common factors he sees among those hotbeds.

Here’s what he came up with. Talent is a mix of three factors:

• Deep practice – I’ve also heard it called deliberate practice. This is the kind of practice that is referred to in the “10,000 hour rule” popularized by Malcolm Gladwell – that it takes 10,000 hours of devoted effort to become a world-class expert at something – that’s 3 hours a day for ten years. Note this doesn’t mean just doing an activity – it means continuously pushing the limits of your ability, always operating just out of your comfort zone, making mistakes and learning to fix them, getting comfortable with that dynamic of improving by failing. And it’s making sure that time is spent doing the activities that you need to improve, whether it’s ball handling in soccer, technique in tennis, or expressivity in music.

  He has three rules for deep practice:

  • Chunk it up – he breaks this into three parts as well – absorb the whole thing, break it into chunks, and then slow down each chunk until you can get it exactly right. I described something similar in my cognitive subroutines post.
  • Repeat it – This doesn’t mean repeating it mindlessly – it’s more about practicing each day and trying to push the limits just a bit more. He cites research saying that we can only live in that edge zone for three to five hours each day, so any more than that is just mindless repetition and doesn’t actually help.
  • Learn to feel it – In other words, internalize it to the point where it’s unconscious and emotions guide your reactions rather than depending on conscious rational thought. Our conscious mind is slow, so to be effective, we have to get everything into the unconscious.
• Ignition – This is the will necessary to sustain oneself through those interminable hours of deep practice. Coyle suggests that one powerful factor is seeing others do it – if they can do it, why can’t I? He gives the example of Roger Bannister and the four minute mile – it was considered humanly impossible until Bannister did it, and within a year many others had. Or the explosion of baseball talent in Curacao after watching Andruw Jones, from Curacao, hit two home runs in his World Series debut as a 19-year-old rookie. Or the rise in South Korean professional women golfers after Se Ri Pak won an LPGA event in 1998. Ignition can also occur because of a desire to belong – Coyle cites several examples of clubs or teams providing the spark for kids to invest the necessary practice time.

  My favorite point in this section was a study by Gary McPherson which tracked students who were taking up musical instruments in middle school, and discovered that the single best indicator of how successful they would be with the instrument was a question that was asked of them before they started: how long do you plan to continue playing this instrument? Those that said they were planning to play the instrument for the long term got more out of 20 minutes of practice than the short-termers got out of 90 minutes. The instrument was part of the long-termers’ identity, and so they wanted to continue pushing themselves and get into that zone of deep practice.

• Master Coaching – Coyle suggests that both deep practice and ignition can be catalyzed by a great coach. The coaches that he interviews are masters at observing each student and pushing the right buttons for each of them to get to the next level. Praise and criticism and information transfer are simply tools to push students to stay in that zone of deep practice at the edge of their abilities. For example, Coyle cites a study of John Wooden’s coaching style, which said that 7% of his communication was praise, 7% was criticism and 75% was information transfer – much of it in the form of “Here’s the right way, here’s what you’re doing (incorrectly), and now here’s the right way again” to reinforce the subtle improvements he desired. Another good quote from the coaching section was that “small successes were not stopping points, but stepping stones … Good. Okay, now do ____”.

One major theme of the book is the process by which expertise gets embedded in our brains. Coyle cites neuroscience research showing that brain circuits that get used extensively are reinforced by growing a myelin sheath around them – the myelin provides insulation for those neural pathways and improves the speed at which those neural pathways fire. In other words, as we repeat and get better at an activity, there is a physiological change that speeds up the signals in our brain so that we can do it faster. I love how this ties into my idea of cognitive subroutines and why I think that repetition and memorization is critical for expertise. I also learned that the myelin sheath breaks down so it has to be continually rebuilt, which is why we have to keep practicing every day if we want to maintain our expertise. Also, it responds to neural activity, and the activity is strongest when we are in deep practice mode, trying new things and seeing what works and what doesn’t.

All in all, a good book covering an important topic in a well-written breezy way. Admittedly, I like it partially because it reinforces my existing biases, so I liked the anecdotes and the neuroscience that supports those biases.

P.S. Another John Wooden quote: “Don’t look for the big, quick improvement. Seek the small improvement one day at a time. That’s the only way it happens – and when it happens, it lasts… Repetition is the key to learning.” This reinforces Drive‘s point that we need to pick our overall goal and get a little better each day.