Aswath Damodaran is a Professor of Finance at New York University's Stern School of Business. He has established a formidable reputation in corporate finance, derivatives and valuation, and is mentioned in the same league as quantitative expert Paul Wilmott.
Damodaran's Stern homepage has a wealth of material including webcasts of his 2008 lectures in corporate finance and equities instruments, and spreadsheet models for portfolio management and valuation.
I'll be posting a review of Damodaran's latest book Strategic Risk Taking: A Framework for Risk Management (Wharton School, Upper Saddle River NJ, 2008) in the coming weeks. In the meantime, you can read a book description and an online manuscript.
]]>
wrote a post-mortem on the hubristic rise-and-fall of the hedge fund Long-Term Capital Management. My interest in LTCM was sparked by the PBS Nova documentary The Trillion Dollar Bet (2000), in which Stanford's Myron Scholes described the hedge fund as "a gigantic vacuum cleaner sucking up nickles from all over the world."
YouTube has an interviewee clip that is worth rewatching: US economist Ben Bernanke, now the Chairman of the Federal Reserve. Bernanke's insights into the Fed's bailout of LTCM now appears to be a rehearsal for JP Morgan's "distressed arbitrage" negotiations with the Fed in March 2008 to acquire Bear Stearns.
]]>
Meet The Life Hackers
Wired Magazine's Gary Wolf has an extensive profile of Getting Things Done author David Allen in the October 2007 issue.
Allen's GTD system is a heuristic for time and workflow management popular in Fortune 500 companies and Silicon Valley firms. GTD gained visibility after The Atlantic Monthly's James Fallow profiled Allen in its July/August 2004 issue. New York Times columnist Clive Thompson also mentioned Allen and GTD in an influential article on the "life hacking" movement, which includes sites such as Lifehacker and Merlin Mann's 43 Folders. Allen has parlayed this exposure into the coaching firm David Allen & Co. and its subscription online community GTD Connect. Lockheed, Microsoft Research and O'Reilly Media have all applied or debated Allen's GTD in their research environments.
]]>
Discovering GTD: A Research Journey
I had discovered Allen and GTD in 2006 whilst working on a Smart Internet CRC research project which evaluated Harvard professor Clayton Christensen's work on disruptive innovation. I soon discovered that IT analysts had misinterpreted Christensen's research data in his book The Innovator's Dilemma (Harvard Business School Press, Boston MA, 1997) as supporting a technological determinist view of disruptive technology.
The IT analysts had missed a post-publication debate between
Christensen and Andrew S. Grove, then Intel's chief executive officer,
in which Grove successfully challenged Christensen on the conceptual limits of technology-driven change to explain his hypothesis (see a 2003 speech and Q&A
by Grove at Stanford's Graduate School of Business). Analysts also
overlooked Christensen's later work that moved away from industry and
macroeconomic-based modelling to consider the misalignment of
communication, innovation and project management systems in firms, and
the vital role of intrapraneurs as sources of internal change.
Christensen's
trajectory raised an important question: How do you translate the
strategic dimensions of disruptive innovation into a firm's tactical
and operational systems?
The Agile movement in software engineering provided one answer as espoused in the Manifesto for Agile Software Development.
Like Allen, many of its exemplars would create methodologies from
reflecting on their own practices and project experiences, such as Kent Beck's Extreme Programming or Alistair Cockburn's Crystal method. Several authors notably Sanjiv Augustine, Michael L. George and Rob Thomsett would also make explicit links between agile practices, disruptive innovation, lean initiatives for cost innovation, and six sigma
approaches to operations. Thus, IT management seemed to be moving to a
confluence of robust good practices for business environments which
answered Christensen's trajectory.
The Futuristics group of alumni bloggers from Swinburne University's Strategic Foresight program provided independent validation outside the Smart Internet CRC and filled in some gaps. Josh Floyd provided insight on how individuals could develop resilience to deal with disruptive uncertainties through his work on enactive cognition. Jose M. Ramos pointed me to the original sources of many Agile practices such as action learning and appreciative inquiry, and his valuable work on anticipatory innovation. Stephen McGrail and Chris Stewart each gave reflections on their project management experiences.
Which is where David Allen's Getting Things Done comes in.
GTD: The Natural Planning Model
Essentially,
Allen's GTD methodology which he calls the Natural Planning Model
distills 25 years of reflections, practices, strategies and simple
rules to deal with one problem: the "interrupt culture" that fragments
our attention and creates a data glut.
Other researchers including management guru Peter Drucker in his classic The Effective Executive (Harper & Row, New York, 1967), Bill McKibben in Age of Missing Information (Random House, New York, 2006), Mihalyi Csikzentmihalyi in Flow: The Psychology of Optimal Experience (Rider & Co., New York, 2002), and John Beck & Thomas Davenport's The Attention Economy (Harvard Business School Press, Boston MA, 2001) have reached similar conclusions.
The GTD discussion below is my personal interpretation and is meant to
illustrate what one individual repertoire --- David Allen's in this
case --- might be. I do not regard Allen's GTD or any of the models and practitioners discussed here as cure-all silver bullets.
GTD's definitions and practices include:
• Open Loops
are "internal commitments" made that are broken or unfinished:
"anything pulling at your attention, that doesn't belong the way it is,
where it is." (Allen, GTD, p. 12).
• Next Actions
are "the next physical, visible activity that needs to be engaged in,
in order to move the current reality toward completion." (Allen, GTD, p. 34).
• A Collections cycle to gather Open Loops materials to be processed.
• Heuristics for the Collections cycle such as the Mind-Sweep for assessing information and the Two-Minute Rule for dealing with immediate items that free up attention.
• A Processing cycle to evaluate, prioritise and action material to reduce cognitive load.
• Heuristics for the Processing cycle such as a Triggers List for brainstorming (Allen also uses Mindjet's MindManager software); Next Action Lists
that are organised by project, context and actionable/non-actionable
data (e.g. lists for "agenda", "next actions", "waiting for", "someday
maybe"), and then evaluated using a "front-end thought process".
• A Four-Criteria Model for Choosing Actions in the Moment based on evaluative judgment of context, time available, energy available and priority (Allen, GTD, p. 49).
• Allen's good practices on calendar management, email workflow, filing
systems, organising your office, procrastination, emotional self-management and
decision-making.
The heuristics are practices that support the Processing cycle and remove the common obstacles that Allen and his coaching team have encountered.
• A Reflective cycle implemented as the Weekly Review practice (Allen, GTD, pp. 45-46).
• A Six-Level Model for Reviewing Your Own Work: a framework
to situate actions and decisions within. Allen offers six levels:
50,000+ feet (Life); 40,000+ feet (3-to-5 year vision); 30,000 feet
(1-to-2 year goals); 20,000 feet (areas of responsibility); 10,000 feet
(current projects); and Runway (current actions) (Allen, GTD, pp. 51-53).
The above summary represents what I perceive as the "core" of Allen's GTD or Natural Planning Model.
Agile Disruptive GTD
Synthesised,
the research work described above suggests a tentative answer on
how to translate Christensen's strategic view into tactical and
operational contexts. Individuals, small teams and organisations face
the need for accelerated decision-making in disruptive, hazardous and
uncertain conditions. A repertoire of individual and small team
practices might provide the foundation to build organisational
resilience. Agile Disruptive GTD might be the marketing label for this
research synthesis.
But there's a deeper level.
For
individuals, the embodied practices can be found in the contemplative
traditions, energetic movements and martial arts. It won't generally
be found in Western corporate strategy or military thinking that
misperceives disruption as coercive power or a challenger-incumbent
polarisation that can be resolved by brutal force. David Allen, Kent
Beck, Alistair Cockburn and other practitioners have instead looked to
the Hindu and Taoist epistemologies, or ways of knowing, in aikido, ba gua, karate, tai chi, kundalini yoga and qigong for subtler understandings. Experiential work, practice-based research and meta-reflection offer several ways forward.
Those
who do should thus discard the Agile Disruptive GTD label for the
pseudo-trendy acronym that it is. Attaching yourself to Agile
Disruptive GTD, Tim O'Reilly's Web 2.0 or whatever other model that is currently the Digerati's favourite misses the point. As Bruce Lee observed when defending his Jeet Kun Do
martial art against traditionalists, those who do might become trapped
by "dead forms": patterns of attachment, rigidity and repetition that
are often based on an individual's adherence to cultural assumptions
and others' models.
Instead, Lee counselled the Taoist
injunctive of a "form that has no form" as the ultimate strategy to
overcome disruptive conditions: mastery through self-transcendence and
disciplined execution that discards "dead forms" to always remain
aware, open and free to change.
]]>
Professor Michael Fry of the University of Sydney has offered public details about the Smart Services CRC's project in Multi-Channel Content Delivery. Professor Fry is seeking research students for two deliverables that can be taken as credit-bearing subjects: Trends in Mobile Technologies & Services and Emerging Vehicular Technical and Service Environments. From the second project's description:
The project will study and analyse technical and business trends in vehicular ICT environments. The project is not about core automotive technologies, but rather addresses new and emerging in-vehicle sensors and wireless networks, vehicle-to-vehicle communications and networks, vehicle-roadside communications and networks, and their capabilities and possibilities for the provision of new services to vehicle users such as context-aware navigation and traffic congestion avoidance. Potential convergence with other in-vehicle technologies such as digital radio, mobile telephones, etc, should also be considered.In 2006 a senior project manager explained to me that the Royal Automobile Association of Victoria and its state counterparts were undergoing some fundamental shifts in customers, markets and their management portfolio for members. For example, the drivers for vehicle-roadside communication included the RACV's expansion into hotel and resort management. In return, I pointed the senior project manager to Peter Morville's book Ambient Findability (O'Reilly Media, Sebastapol CA, 2005), and his discussion of wayfinding, or how people use symbols and objects to spatially orient themselves when navigating. Wayfinding is thus relevant to developing context awareness in physical and virtual worlds.
Microsoft Auto team which will leverage its software engineering expertise for in-vehicle entertainment, wireless networks and communication systems. In-vehicle environments are the logical extension for Microsoft's battles with Apple for the digital home space. Microsoft signalled this as a strategic priority when it announced a deal in September 2007 with Siemens VDO Automotive AG "to develop a new generation of on-board communication, navigation and entertainment systems that use Microsoft Auto, a software system and hardware reference design." Microsoft's contribution focuses on architecture, design tools and embedded systems. Just days later BMW and Siemens announced a deal with Microsoft and Novell that might hint at the preferred approach to the systems architecture: Linux open source software. This alliance would have the brand, market channels and expertise to get-to-market far quicker than a CRC although some analysts hope Microsoft will suffer execution problems.
The new AutoCRC might also be a domestic competitor for Professor Fry's research agenda. Yet if the CRC Association could negotiate and orchestrate some cross-CRC collaboration then this win-lose situation could be reframed as an infinite game or win-win-win outcome.
An opening gambit would be to dispatch a research team to the Internationale Automobil Ausstellung (IAA) in Germany to study the prototypes, or at least closely analyse the YouTube clips. The Society of Competitive Intelligence Professionals has some useful guidelines on how to conduct this analysis ethically at trade shows. Eldad Eilam's Reversing: Secrets of Reverse Engineering (John Wiley & Sons, New York, 2005) explains the more covert "hacker" approach that Microsoft's competitors will use at the IAA.
Professor Michael Fry's and Professor Ryszard Kowalcyk's teams might achieve the dream of every Wired Magazine pop futurist: the car of the future. Alternatively, they might make perfect scriptwriters for NBC's planned new series of Knight Rider. ]]>
• Blue sky provocations and imagineering sessions for breakthrough thinking and concept generation via various methods.
• Intrapraneurs who tap organisation's common knowledge pool for technology transfer ideas.
• Developing early prototypes for products and services design - using a collaborative and iterative process such as Crystal or Scrum which leverages the energy and expertise of small teams.
• Spin-off companies that commercialise specific R&D projects such as Spatial Voice from the Smart Internet CRC.
• Positioning a spin-off firm for a Mergers & Acquisitions suitor: it worked for MySpace and News Corporation and might work if Microsoft acquires Facebook.
Newsweek and Slate scribe Daniel Gross recently noted another option - the entrepreneurial ecosystem:
Toyota]]>
clearly stole a march on its slow-footed U.S. rivals and shut them out
of a hot new market, much as Apple crushed its competitors with the
ubiquitous iPod. But the iPod, and the broader innovation it
represents--making huge quantities of music and video portable--has
created a small entrepreneurial ecosystem.
Apple, GE, Google and Toyota
remain popular firms for media analysts because they seemingly have it
all: a sustainable market position, the ability to leverage customer
knowledge, fast cycle times and resilience in the face of complexity
and uncertainty, and innovations that create new markets. Their unique
conditions, market leverage and management teams may never be copied
again. However, many insights from their existing enterprise architecture
could be adapted to a commercialisation pathway or spin-off company.
Despite each company having their share of problems, managers in them
have read and acted on the insights of mid-1990s "business ecosystems"
thinkers notably Michael Rothschild, Dee Hock and Kevin Kelly. The broader debates on climate change and sustainability will only increase the popularity of ecosystems thinking and entrepreneurial ecosystems as an innovation framework.
What can innovation researchers learn from Gross on entrepreneurial ecosystems and ecosystems thinking?
First, the relatively static world of Michael Porter's "5 Forces" and value chain methods is limited, whilst even the non-linear promise of value networks remains untapped. Ecosystems thinking
offers innovation researchers a framework to "reframe" the value chain and its
relationships in new ways, such as "cradle to grave" solutions for ICT
products and services. Entrepreneurial ecosystems provide a way for innovation researchers to translate this thinking into a market outcome.
Second, any initiative needs to be attuned to evidence-based and market-based management.
Apple, Google and Toyota are successful because they have gone beyond
manifestos, language games and vision statements to operationalise this
at process, project and work package levels. The euphoria about each
company's respective cultures is really about their success at
embedding this approach in employee attitudes, practices, and value
creation. Innovation researchers who aspire to similar global domination must
strive to develop ecosystems thinking as a cognitive capability and
practice-based approach, and to apply it on a daily basis in commercial
and research contexts. In turn, this needs an organisational culture
that recognises, rewards and supports researchers who can operate in evidence-based and market-based management environments.
Third, innovation researchers need to cultivate an entrepreneurial outlook and to
harness the power of small teams. If done effectively, this creates
the momentum and synergy to drive a research project from the lab to
market. Two ways to achieve this are to have an opportunity evaluation process (Babson College and Swinburne University's Tom McKaskill
offer two examples) and to embed this as a "project gate" in strategic
planning. To succeed researchers have to be prepared to critically
re-evaluate their most cherished assumptions, practices and
technologies or what Fred Brooks called "silver bullets". BBC Two's series Dragon's Den will give you a taste of how brutal and confronting this opportunity evaluation process can be on a personal level.
Fourth, innovation researchers should look to untapped opportunities in value
ecosystems and their recombinations or permutations. Gross suggests
that if you can't be an Apple, Google or Toyota there are still ways to be successful.
He observes that other companies can take a coevolutionary position in
the niche, develop line extensions or create subsidiary markets:
• Apple's iPod created a subsidiary market in digital lifestyles accessories.
• Toyota has created a small publishing industry in its lean or Toyota Production System applied to manufacturing and software development.
• Google's PageRank algorithm has created a subsidiary market in search engine optimisation which changes each time Google updates its algorithms.
Fifth, instead of trying to chase the next next thing (unless you have the subcultural skills of a Malcolm Gladwell or Douglas Rushkoff style cool-hunter) you develop a portfolio or repertoire of projects. This is the mindset of Harry Markowitz and the Capital Asset Pricing Model in options pricing for capital markets and risk-aware portfolio management. In contrast, the post-mortems on Bell Laboratories and Xerox PARC show plenty of researchers who staked their careers on one vision but lacked the voice.
]]>