Tuesday, December 30, 2008

A Little Encouragement for Baby Boomers (& Happy New Year!)

The term aging Baby Boomers makes my teeth hurt, and I saw it more than once in the popular press in 2008. I suspect it’s an insidious plot by Gen X and Y to define their predecessors as “past their prime and fading into history.” Something they cooked up in journalism school. Last year, just before graduation.

Aging Baby Boomers. I hate that. And I respectfully submit that the very best days of our generation are still in front of us.

Maybe not physically.

OK. Definitely not physically.

But in terms of getting things done, making a contribution, and changing things for the better. The very best days are still in front of us—and it’s essential to our mental health to keep that idea front and center.

It reminds me of a visit my family made a few years ago to the beautiful Rijksmuseum in Amsterdam. The visit came not only during Rembrandt’s 400th birthday celebration, but during a renovation of the museum, so that the staff had assembled some of the very best of the collection in a very small area (and closed off the rest of the museum). This was music to the ears of touring parents who would try to get their children through about a dozen museums in ten days.

As we went through the guided tour I kept hearing about the Golden Age. The Golden Age this. The Golden Age that. It was then that I came to realize that the Netherlands—historic, lovely, democratic, energetic--thought of its best days as four hundred years ago, during the seventeenth century.

All I could think, in my ugly-American mindset, was how difficult it must be to live in a place where the belief is universally held that the golden age is not now, not tomorrow or next year or even a century from now, but 400 hundred years ago.

Don’t you lose a step, a bit of energy, maybe some of your edge if you are always and ever on the downslope? Doesn’t it make the rocking chair look just a shade more inviting, to think the best is behind you?

With that in mind, and as you—my fellow Baby Boomers, reaching ages 49 to 66 in 2009 (if you accept Strauss and Howe’s 1943-1960 definition)--make your New Year’s Resolutions for 2009, think about some of the past contributions and milestones of folks "our age." If nothing else, it'll encourage you not to skimp when you make up your list.

These examples are all taken from Eric Hanson’s fun new book called A Book of Ages.

Here we go. Pay attention.

At age 49, Mark Twain wrote Huckleberry Finn and George Eliot wrote her masterpiece, Middlemarch. At 49, Abe Lincoln spoke out against slavery and lost his first debate to Stephen A. Douglas. Davy Crockett died at the Almao after running out of bullets.

Have courage, roll with defeat, but don’t run out of bullets.

At age 50, Julius Caesar crossed the Rubicon, Henry Ford began manufacturing the Model T, FDR offered the nation “a New Deal,” Irving Berlin wrote Good Bless America, Eugene O’Neill wrote The Iceman Cometh, Julia Child premiered The French Chef, and Igor Sikorsky (after 30 years of trial) flew his first helicopter. Grateful Dead guitarist Jerry Garcia introduced a line of neckties. Painter Chuck Close became paralyzed from the neck down but learned a new way to hold his paint brush and would continue painting three enormous canvases a year from his wheelchair.

Oh, and Charles Darwin, at age 50, published The Origin of Species.

Keep tinkering. Keep changing. Keep thinking outside the species. Never give up.

At age 51, Leonardo Da Vinci painted the Mona Lisa. Some time later, and not to be outdone, 51-year-old Dr. Suess was given a list of 225 words to use in his new book. Two of the words were cat and hat.

At age 52, milkshake machine salesman Ray Kroc learned that a hamburger restaurant in San Bernardino owned by Richard and Maurice McDonald was making forty milkshakes at a time. Kroc investigated.

At age 53, Walt Disney opened a theme park in California. Samuel F.B. Morse strung some wires between Washington and Baltimore. Charles Dickens was in a train returning from France that plunged off a bridge, killing ten. Dickens’ car was left hanging from the trestle. After he escorted a lady friend off the train, he went back on the teetering car to save a manuscript he has been writing.

Kind of puts into perspective the last time you lost your cool trying to recover that unsaved Word document, no?

At age 54, Oliver Cromwell became lord protector of England, Frederick Douglass was allowed to vote for the first time, and Robert E. Lee declined the invitation of Abraham Lincoln to lead Union forces. Alfred Nobel read his premature obituary in a French newspaper, found himself described as a “merchant of death,” and dedicated most of his enormous wealth to promoting peace.

Hanson’s book is a great read. A little bit male. A little bit artsy. Too much of a couple of folks in particular. But lots of fun to read. Buy it. There’s lots more that I’ve left out.

At age 55, Rachel Carson wrote The Silent Spring, creating the modern environmental movement. Of less import but greater initial acclaim, Wilt Chamberlain published his memoirs, claiming 1.2 partners per day (20,000 in all) since he was 15.

At age 56, Henry Luce launched Sports Illustrated. George Frideric Handel premiered The Messiah.

Decades later we’re still singing, and still waiting for the bathing suit issue.

At age 57, Anais Nin admitted to two husbands, one a New York banker and the other a forest ranger in California. She compared her life to a trapeze. James Joyce shared copies of Finnegans Wake with his friends. George Washington was sworn in as the first president of the United States, saying he felt “like a culprit who is going to the place of his execution.”

It turned out pretty well, at least for Joyce and Washington.

At age 58, Miguel de Cervantes published part one of Don Quixote, Daniel Defoe published Robinson Caruso, and Fyodor Dostoyevsky finished The Brothers Karamozov. Langston Hughes, who had written 26 books in 34 years, started writing from midnight to six or seven in the morning because people kept stopping by during the day and interrupting him.

Good energy and focus, eh?

At age 59, Elizabeth Taylor married for the eighth time. There’s lots more good 59-year-old accomplishments, but I’ll stop there. It seems like enough said.

At age 60, the prophet Muhammad and his followers conquered Mecca. Jack LaLanne swam from Alcatraz to Fisherman’s Wharf in San Francisco. Handcuffed. Towing a half-ton boat. Ditto the above—I’ll stop there.

At age 61, on a plane heading for Washington to be interviewed for a seat on the Supreme Court, Harry Blackmun did “what he has always done when faced with a decision:” he wrote a list of pros and cons. The pros won. Blackmun will have a decisive influence on Roe v. Wade.

At age 62, Ed Sullivan uttered five words: Ladies and gentlemen: the Beatles.

At age 63, Lena Horne opened a one-woman show at New York’s Nederlander Theater that would run for 333 performances—the longest running solo show in Broadway history.

At age 64, Harry Truman was so far behind in the polls that pollsters just stopped asking. Truman embarked on a whistle-stop tour of hundreds of cities, went to bed election night thinking he had lost, and woke up elected. Isaac Newton was knighted, Mao Zedong launched the Great Leap Forward, and Henry Ford produced his 15 millionth Model T.

At age 65, Winston Churchill—arguably the greatest man of the 20th century—was elected prime minister of England for the first time. He told the country he had nothing to give but toil, blood, tears and sweat. Also at age 65, Andrew Carnegie offered $5.2M to the city of New York to build libraries, the start of some 2,800 libraries built nationwide from Carnegie funds.

At age 66, the oldest our Baby Boomers will be in 2009, Paul Revere built the first mill in the U.S. for rolling copper, eventually trademarked as Revereware.

Lest you think you can rest at 66, Baby Boomers, there’s more, but I’ll leave you with only a hint: At age 90, Frank Lloyd Wright was asked to design an opera house, two museums and a post office. More spectacularly, 90-year-old Sarah gave birth to Isaac.

Happy New Year, Baby Boomers! May our Golden Age be always in the future.

And remember: Don't run out of bullets.

Monday, December 15, 2008

The Incalculable ROI (Ode to the MBA and the Erie Canal)

Return on Investment (ROI) is a funny thing. It is deceptively easy to calculate but almost never comes out the way you expect. In many cases it doesn't work because what you can quantify will almost certainly pale in comparison to what you cannot.  These inestimable flows are, nonetheless, very real and very valuable.

I call this the incalculable ROI.

I was pondering such a thing when I read the recent Wall Street Journal article on Executive MBAs (EMBAs). Scott Thomas, a 31-year-old who was halfway through the EMBA at a Cleveland school dropped out to enroll at Ohio State University’s EMBA program. This doubled his tuition costs to $72,500 for the 18-month degree.

Later in the article the WSJ told us, based on their calculations, that this was probably a good thing for Mr. Thomas because the Ohio State program yields a 170% return on investment, third behind only Texas A&M and the University of Florida.

Here’s some of how the WSJ decided this:
We scoured the responses from our summer 2008 survey of EMBA graduates for data about salary, raises received after graduation, company-sponsored figures, tuition and out-of-pocket costs. . .To calculate the benefit, or return, we used the graduate-reported median raise after completion of the program as the first-year salary increase. We added a 5% annual increase over the following four years, based on the average annual increase expected by compensation specialists and executive recruiters.
This kind of heroic analytics can result in being terribly precise about great inaccuracies.  It is the kind of limited ROI that, hopefully, Mr. Thomas will be taught to avoid during his EMBA training.

In fact, there’s good indication that Mr. Thomas already “gets it.” One of his reasons for transferring to the Ohio State program was that “the alumni network is unbelievably large, and they’re unbelievably loyal.” That's one reason he agreed to double-down on tuition. He has in mind a potential inflow, a potential return, that is—at this point in Mr. Thomas’ life—incalculable. Because, by moving to a program with a terrific alumni network, Mr. Thomas might well connect with a future investor in some future start-up. Or his next boss. Or a partner who goes on to help him launch a world-beating product. Whatever the “incalculable inflow,” Mr. Thomas believes that it will potentially—and more than likely—dwarf the ROI carefully calculated by the WSJ.

Steve Jobs’ well traveled, oft-downloaded 2005 commencement address is another example of the incalculable return. When Jobs talks about dropping out of Reed College because he didn’t want to spend his parents’ life savings without having a clue what he wanted to do with his own life, he spent the next year visiting classes for fun. One was a calligraphy class, something he took because he admired the art and was interested in learning how it was done.
None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it’s likely that no personal computer would have them.
This is the incalculable ROI.  The quantifiable stuff is what you can see and reasonably anticipate, and it’s not unimportant or irrelevant by any means. But the real return almost always dwarfs the anticipated cash flows. The real return comes about because presumably smart, talented, ambitious people (like Scott Thomas) place themselves on a collision path with other smart, talented, ambitious people, or (like Steve Jobs) on an intercept course with interesting, engaging ideas.

And, the incalculable ROI applies especially to big ideas and huge initiatives.

Take the creation of the Erie Canal. On October 26, 1825, Governor DeWitt Clinton boarded the Seneca Chief at Buffalo, arrived in Albany nine days later, and then, with steamboats replacing horses, floated down the Hudson to New York harbor where he poured a keg of Lake Erie water into the Atlantic Ocean. It was, like the title of Peter L. Bernstein’s excellent book, a Wedding of the Waters.

The Erie Canal was 363 miles, 83 locks, 675 feet up and down, and cost $7,143,789 to build. A calculation of the ROI on the project would show that the construction cost was paid in nine years. In 1882, when tolls were finally abolished, the canal had produced revenue of $121 million, more than four times its operating costs.

On a micro level, a shipment of flour could, thanks to the Erie Canal, travel 2,750 miles by water before its transportation cost was equivalent to 130 miles of travel by road.

All things considered, this was a pretty darn good ROI.

But, what did the Erie Canal really do? How do we, in retrospect, measure the incalculable ROI?

Well, thanks to the Canal, Albany, Utica, Syracuse, Rochester and Buffalo all became boomtowns while ten brand new municipalities were founded between Syracuse and Buffalo alone. And, New York City became one of the world’s elite cities: In 1824 some 324 vessels were counted in New York harbor. With the Erie Canal completed, an observer counted 1,241 vessels in the harbor one day in 1836.

Many hitherto subsistence farms in New York began growing product for market. Farmers with new-found cash now joined their urban neighbors in the consumption of products from northern factories. Luxury articles became attainable by the working class. Thanks in large part to the Erie Canal, the cost of a wall clock dropped from $60 to $3 by midcentury, and a mattress from $50 to $5. Folks in Batavia were able to feast on Long Island oysters. Traders in New York City began buying commodity contracts ahead of the harvest, creating an early form of hedging and adding to the City’s financial clout.

The turmoil caused by the rapid development of western New York made it fertile ground for some of the greatest movements of the Second Great Awakening, changing forever religion in America.

The Erie Canal brought strong Yankee growth to Ohio, Indiana, and Illinois, keeping Southerners (arriving “up” the Mississippi) from dominating those states, a major factor in the years before the issue of slavery was settled. In fact, the Erie Canal changed the axis of American economic power from north-south to east-west, and would lead to an “age of canals”--especially in the North--that would provide a meaningful advantage during the Civil War.

The money generated by the Canal, the so-called Canal Fund, served as a kind of stabilizing central bank during the Crash of 1837 when no central bank existed.

The completion of the Erie Canal led to a sharp rise in patent applications along its route. New York State led the nation in new patents per capita in almost all sectors of the economy in the mid-nineteenth century, with only southern New England leading in manufacturing after 1830.

The Erie Canal meant Midwest food production would flood Europe, leading Great Britain in 1846 to repeal tariffs on food. This freed European labor for work in factories, reducing the cost of production around the world.   How do you calculate that ROI?

Scott Thomas believes in the incalculable ROI. So does Steve Jobs. So did Dewitt Clinton.  I have a personal belief in the incalculable ROI.

I once bought a plane ticket to fly from Boston to Denver, with a stopover in Chicago. It was for a job interview. I was upset because the ticket was last minute and too expensive and I wasn’t sure the hiring company would pay for it (and I didn’t have much money). I wasn’t happy about the stopover in Chicago. I wasn’t sure I wanted the job and, after I’d interviewed, I was sure I didn’t want the job.

I suppose I was thinking that it would be a good experience. I could practice my interviewing. I might meet some interesting people. I could see how another company worked. I’d get to see the Rocky Mountains.

My calculated ROI on that ticket was miserable. But how about my incalculable ROI?

Well, on the way home, after meeting the company I didn’t want to work for, on the stopover I didn’t want to make in Chicago, with the ticket I didn’t want to pay for, I met a woman. Twenty-five years, six addresses, four dogs and three children later, we’re still together.

How do you calculate that ROI?

Thursday, December 4, 2008

Leadership in the White Space

Before I talk about white space I need to talk about dark matter.

Sometime in the 1930s scientists began observing phenomenon, like clusters of galaxies, whose movements didn’t make sense based on what could be seen. There had to be more mass “out there” holding things together. In fact, there had to be a lot more mass. That was the first inkling of something called dark matter.

As time went on, more and more data suggested that not just some, but most of the cosmos was invisible. And scientists got very clever at observing, say, the way light from distant galaxies bends, figuring out the total mass it would take to create the bend, and then subtracting out the known mass. The result: dark matter.

It’s like Sherlock Holmes said, “Eliminate all other factors, and the one which remains must be the truth.” Even if it’s invisible. Even if nobody quite knows what it is.

Today, we think dark matter may be the most voluminous and important stuff in the universe.

I believe there’s a comparable concept in business, organizations and leadership which is sometimes called “white space.”

It’s invisible, largely inscrutable, and may be the most important force in an organization. And there is no doubt that it bends light and energy to its will.

The other day on XM Radio I was listening to Bob Edwards interview one of XM’s Classical Music hosts. The two were discussing the enormous impact of Leonard Bernstein. Edwards asked a really good question, as he often does: If every member of the New York Philharmonic is a virtuoso musician able to read, interpret and play virtually any piece of music ever written for their instrument, what exactly does the conductor do?

The XM Classical host answered, and I’m paraphrasing slightly, “There’s a lot that goes on between the notes.”

That could be the title of a classical murder-mystery novel, no? Between the Notes: Mozart, murder, oboes, sex, and mis-tuned timpani. Yowza. The hard-boiled detective would look at the voluptuous flutist and say, “You may be able to hit the high E-sharp, but you have to know there’s a lot that goes on between the notes.”

Anyway, I thought the XM host touched on something real. There’s a kind of glue, a kind of energy that binds all of the talent in an organization together. Even when—or especially when—all the talent can hit every note on the button every time. With vibrato, even.

This reminded me of a CEO interview I read maybe ten years ago. This particular CEO, who led a brilliant management team, was asked what he did all day. He replied, “I just manage in the white space.”

In my first MBA year we were required to take something called Human Resources Management. I distinctly remember, on day one of the course, the professor said something like, “I know you all think this is a waste of your time. You think you should be learning how to read balance sheets and segment markets and value equity. And that’s part of what you should be learning. But I want you to know something: This is the most important course you’ll take. You just won’t recognize that for a while.”

He might have said—and we would have been equally skeptical—“Anyone can learn to do a cash flow. We’re going to spend the semester learning something very different, about operating in the white space. Some of you will never figure it out. But those of you who get it right, there’s some chance you’ll be successful.”

Learning to read a balance sheet is, in a way, like learning to play an E-sharp. It’s a real, teachable skill, one of the visible galaxies. It’s the stuff out there we can see and understand. But the stuff we can’t see, that binds all the cash flows and notes and keeps the galaxies from flying off into pieces—that stuff needs lots of our attention, too.

Getting an orchestra of prima donnas to play together brilliantly is about leadership in the white space. Making a tough decision on an investment, building support along the way and, generating enthusiasm for the final decision--that’s leadership in the white space.

A short time ago we didn’t know dark matter existed. Now it appears to be the stuff that holds everything together. It’s where all the cosmic heavy lifting gets done.

In organizations, the white space does the same thing. It’s where all the notes get wired together. It’s where all the energy is manufactured. It is, in most cases, the fundamental contributor to success.

As for that murder-mystery novel I was proposing, the one with the sex and oboes, the one entitled Between the Notes?  Question the percussionist.

Any good detective will tell you to never trust a guy who hits things for a living.