The Yankees Black Holes and My Rawlings Mitt

This week I did something very unusual for a life-long Mets fan: I cheered the Yankees to their record 27th World Series triumph. I have friends not even Mets fans who complain that the Yankees don’t deserve our respect because they simply bought their way to victory. I say the Yankees deserve our praise because they do what any great team is designed to do – they win and they do so in an exciting way. Now don’t get me wrong sports fans I am not about to trade-in my life-long and generally unrequited love for the Mets. When they win on average once every 24 years it is a sublime experience. However I have to hand it to the Yankees – they are a class act.

Baseball has been much on my mind lately. When my family and I moved back to New York from London last year the move went very smoothly and we lost neither children nor pets nor most of our possessions except for one missing item: My circa 1973 Rawlings baseball mitt. Not just any glove mind you but one that had been lovingly worn-in through years of play oilings and nights tucked under a bed corner. This was no longer a stiff piece of cowhide; this was as supple as a fine Italian driving glove. But now the mitt was gone vanished into that black hole where favorite running shoes iPods and keys disappear beyond the event horizon.

So you can imagine my horror when I had to go out and buy a brand new mitt to play catch with my son Walter. I have to admit that my new glove was a bit of an equalizer – wearing what felt like a cinderblock on my left hand I dropped as many fly balls as nine year-old Walter. But as I was explaining how I would never have missed a particular catch with my old glove a new business idea came to me. How many other aging ballplayers had lost their favorite glove or had it thrown away in some over ambitious housecleaning? Might there be a market for pre-worn baseball gloves akin to the market for pre-washed jeans? Would every dad need to wait until he could no longer throw a ball just to wear-in a second mitt all the time explaining to his wife why they needed to sleep for the next five years with a filthy leather glove tied around a baseball under their mattress?

As I was just putting the finishing touches on my brilliant new business plan a funny thing happened. I found my old mitt hidden in a bag at the back of a storage closet. It was even better than I had remembered it. Soft pliable curved-up at the end to scoop ground balls. So I grabbed Walter ran to the park and put the mitt to work. Walter was a bit surprised at my new-found zeal but I have not had so much innocent fun since the Mets won the1969 World Series.

Now if the 2010 Mets could only trade JJ Putz for Tom Seaver I could stop pretending I am a Yankees fan.

Skype and Curved Spacetime

This is a post about curved spacetime. Don’t worry I am not going to attempt an amateur explanation of our four-dimensional universe courtesy of Einstein’s Theory of General Relativity. Instead this is a story of how the current generation of kids relates to time and distance in a fundamentally different way from their parents.

I was on a panel the other day with Josh Silverman the ceo of Skype and I told him the story of how my 11 year-old daughter Mariana uses the service to stay close to her friends in London. When I was growing-up in New York in the 1960s and 1970s my family was fortunate to spend our summers in France. I had a group of “Summer friends” whom I only saw a few weeks a year and with the exception of an annual Christmas card did not speak to or correspond with either. I did not dream of calling these friends because international long distance was something reserved for three-minute emergency calls.

Contrast this friendship interruptus with Mariana’s social life. When our family moved back to New York after seven-plus years in London Mariana left behind some very good friends. However rather than falling into her father’s pattern of the occasional Hallmark holiday card and an annual visit Mariana stays involved in the lives of her friends over Skype IM SMS and other modern marvels. The quality of her interactions is also far different than mine were. Mariana remains part of her friends lives in real- or at least near-time. Where I might recount in the Summer or via a card only the highlights of my year these girls stay close to one another and share the more mundane daily texture of their lives.

I think a number of important consequences flow form this change in communication – most of them very positive. First these digital natives only have a single large group of friends as opposed to the geographical clustering of my generation of digital immigrants. This is not to say that space no longer matters at all – we humans even the most modern editions still live more or less in one place. However location need no longer isolate us.

Second the cost of Skype and similar media is essentially zero. This means that communication can continue until there is nothing further to say rather than when your three minutes of phone time or ten words of telegram cost units run out. My mother still tells me that I should call Cousin X when I am in Chicago for a few hours not being able to wrap her brain around the development that time more than cost is the limiting factor when it is no more expensive to call Cousin X from New York than locally.

Third the quality of the narrative changes when neither location nor cost impinges on the message. Mariana and her friends have real conversations – their sampling rates in converting analog life into digital communication streams are high. Accordingly they do not need to fill each other in about what happened in their lives in between messages; they live more synchronously.

I don’t yet know how my children’s lives and relationships will be changed by this bending of spacetime but just as Einstein noted that the position of the observer alters his perception of motion I am just an outsider looking on in wonder.

Removing the Blinders

Why did early broadcast television often show images of announcers standing in a radio studio speaking into microphones? Why did early adopters of cell phones sometimes stand in old phone booths to make calls from the street? And why did the first websites launched by newspaper companies look like electronic versions of yesterday’s paper? [Clue: because they were.]

We think a lot about these issues at Thomson Reuters. They are examples of what behavioral economists and psychologists call framing. It has been demonstrated empirically that the manner in which fundamentally identical choices are presented (or framed) to humans can result in very different outcomes (See Amos Tversky and Daniel Kahneman 1981. "The Framing of Decisions and the Psychology of Choice." Science 211: 453-458.).

OK enough social science why is this important? I believe we humans have a marked tendency to carry over the limitations of the last era’s technology to our first applications in a new domain regardless of whether these limitations remain necessary. It is as if our imaginations remain in blinders.

Here is an example from the professional information world I inhabit. The first versions of many professional database products such as our Westlaw required the user to first choose the specific database she wished to search before entering her query Google does not require this so why did we? Framing. Prior to electronic legal search researchers like I used the law library. If I needed to research an issue under Delaware law I went to the appropriate shelf in the library and then chose the relevant authority. So when this user workflow was carried over to the first electronic systems it seemed simple enough to require the user (often the librarian in the early days) to first identify the appropriate database (the “shelf”) and then formulate his query.

Old habits die hard but I am glad to say that the latest version of Westlaw now in beta has been freed from these old restraints. All the complexity resides in the sophisticated search algorithms and the interface is blissfully simple and elegant. A great deal of what we think of as innovation is really an exercise in removing our inherited blinders or jumping out of our frames. But if it were that easy the the first cell phone would have been an iPhone.

On Turning 50

I shall turn 50 tomorrow which does not worry me at all. Not having set goals financial or personal that needed to be achieved by a date certain I am free to pursue my open-ended objectives: a happy marriage kids who seek success for their own fulfillment and not for the greater glory of their parents friends who share universal values but present them in novel and fun packages a dog who is always happy to see me and the sort of work at which one does not eagerly count the days to retirement.

As the philosopher-poet George Santayana wrote “For these once mine my heart is rich with these.” There is but one aspect I fear. In the Pyrrhic battle against aging but not age I put in my time at the gym and its sweaty blend of weights and technology. I have long since resigned myself to punching my true body weight into treadmills cross-trainers and stationary bicycles and I had little trouble entering “49” this time last year. However I can’t quite yet see myself entering “50” tomorrow. Perhaps for all sorts of good reasons I should get to the gym still tonight.

Roger and Me

I like to play and to watch tennis. Roger Federer has been and remains my tennis hero because of his outstanding record of achievement on the court and because of the classy way in which he wins – he is the most complete and the most elegant player of all time. No one before him has combined both power and grace in such a potent competitive package.

I greatly admire Rafa Nadal’s huge power speed and ferocity (at least when he is not playing injured); I warmed to Andre Agassi over the years as immaturity gave way to pure heart; Pete Sampras and Rod Laver occupy their rightful places in my pantheon of tennis gods; Bjorn Borg and Pancho Gonzalez deserve special mention; and Arthur Ashe while not among the greatest players was surely among the greatest human beings to win a major.

In addition to the pure fun and physical exertion of playing tennis I enjoy the personal challenge of self-mastery and quest for self-improvement. Two mathematical functions describe my game. The first is the downward sloping curve of physical ability speed and power as I approach 50; the second is thankfully the upward sloping curve of experience court time and muscle memory. For the time being the slope of the latter exceeds the former and thus their point of intersect has been rising.

I also enjoy the mental and competitive aspects of the game marking my progress by epic matches with close friends with the satisfaction of a rare win over a better player far outweighing any disappointment at a loss. The parallels between sport and business are overused to the point of being hackneyed; however the focus drive and control required to perform at world class levels are similar.

It was thus with a tinge of sadness that I watched Roger Federer self-destruct Monday evening at Flushing Meadow. He coasted seemingly effortlessly through the first set and a half and then seemed to grow complacent. He let an imposing Juan Martin Del Potro back into the match and then could not take back up his game as so often in the past. I have seen businesses do the same including one I have spent much of a career getting back into the game.

I see this year’s US Open final as less of a passing of an era although Del Potro will all but certainly mature into a potent force over the coming years and more of a cautionary tale for all of us on the court or in business. We are at our most vulnerable when we achieve our greatest success and acclaim. A bit of healthy paranoia and humility so long as it does not bring on self-doubt and paralysis is no bad thing.

Federer has had a very good year in tennis and more importantly a very good year in life with the birth of his twins. His place in tennis history is assured and the next time they meet I have a hunch Del Potro will need more than his huge forehand to win.

For My Friends at BusinessWeek

When my friends at BusinessWeek asked me to contribute an article to an issue they were planning on the role of optimism in business I was happy to oblige for two reasons.

First I believed that I had an important case to make that growth in the number of professionals in the developing world (and the concomitant spread of the rule of law fair and transparent financial markets and high quality healthcare at an affordable price) is not only good for Thomson Reuters but also for the societies in which these professionals work.

Second BusinessWeek itself has been the subject of a number of swipes in other publications ever since rumors of its purported sale began to leak and I was happy to support Steve Adler and his very professional team at BW. The fact that the economic model for business news has shifted rapidly under the feet of BW Forbes and Fortune should not now be seen to detract from the quality of the work of their journalists.

Here is the article from the August 24 2009 issue:

A Boost from Professionals

The rise of a class of highly trained workers in the developing world bodes well for growth

Why are these new professionals important? Because the growth of law accounting and other professions requiring formal training appears to be correlated with lower corruption levels and growth in gross domestic product in these countries. That’s excellent news for our networked world economy.

A generation ago for instance patents didn’t exist in China. The country did not even adopt patent laws until 1985. At the time there were a mere 5000 attorneys to serve a population of more than 1 billion.

PATENT POWER

Today China is an intellectual property powerhouse. According to the Derwent World Patents Index which we at Thomson Reuters publish China now issues about 30000 patents annually helping to keep the country’s 150000 lawyers busy. Measured by applications China’s patent office has become the third-busiest in the world ranking behind only Japan and the U.S. It is expected to pull ahead of both by 2012.

No short-term economic disruptions can derail the powerful developments behind China’s patent boom: the transition from an economy based on manufacturing to one based on technology and the establishment of a legal system that encourages innovation by protecting property rights.

Indeed China’s ascendancy in the global patent market highlights a broader trend of professionalization in the developing world. The growth in the number of lawyers in China is mirrored by the increase in accountants in India physicians in Brazil and financial traders in Dubai. This expanding army of professionals is on the front lines of globalization.

It includes a wide variety of specialists whose vocations require prolonged training and formal qualification. Definitive numbers are difficult to obtain but Thomson Reuters analysis indicates that the total number of global professionals in developing countries now stands at 4 million a figure projected to grow at 6.5% a year to 5.2 million by 2013.

The ranks of these professionals are mounting not just because these nations are beginning to get serious about transparency the rule of law and market pricing. There is also a broader force driving the growth of this class: the continuing harmonization of worldwide legal and financial reporting rules.

Consider International Financial Reporting Standards (IFRS). By 2013 more than 90% of the world’s gross domestic product will be earned in nations that have adopted the IFRS creating a strong global demand for accountants who have been trained in these regulations.

What’s more since the U.S. Congress passed the Sarbanes-Oxley Act in 2002 more than a dozen other countries—including Australia France India Japan Mexico and South Africa—have passed similar laws and regulations. This has prompted the proliferation of still more professionals.

When you have a global community of professionals—accountants lawyers or financial practitioners—speaking a common language it is easier for developing countries to do business with the developed world. One of the main reasons Islamic finance has blossomed into an estimated $1 trillion business is that a skilled community of professionals has developed a group that is adept at merging Islamic religious principles with Western criteria for financial product development and standardization. Islamic finance didn’t even exist as a specialty in the early 1960s. Now it’s estimated to be growing 10% to 15% annually.

DECLINE IN CORRUPTION

And it’s not just about doing deals. While there are exceptions there is strong evidence that professionalization leads to an increase in production and a decline in levels of corruption.

The Czech Republic has seen the number of professionals in its workforce grow by 15% over the last five years a period in which the country also has shown a 9.5% gain in per capita GDP and a 40.5% improvement in the widely used Corruption Perceptions Index published by Transparency International a Berlin-based nonpartisan group that supports anticorruption reforms around the world.

The Czech Republic isn’t the only developing nation profiting from professionalization. Higher GDP and lower corruption levels are seen across the fast-growing business economies of Eastern Europe. Over the same period for instance Poland has had a 37% rise in the number of professionals a 17% rise in per capita GDP and a 15% improvement in its ranking in the Corruption Perceptions Index.

At a time when the world is enduring the worst recession since the 1930s good news can be easily overlooked. The professionalization of the global workforce is excellent news and we should not underestimate its impact. As it channels the recovery into today’s fastest emerging markets professionalization will help frame the coming economic rebound.

Pigeons Rowboats and the Cloud

It’s a while since I’ve written a serious piece in this blog about business or technology strategy so I thought I would make amends below. After this dry piece the few remaining readers of this blog will probably wish that I go back to soccer and sauna – at least subjects that I know something about..

First the punchline. I think one of the most difficult decisions managers need to make in any business that relies upon a significant amount of technology (pretty much every business these days) is when to do it yourself and when to partner or rely on third parties. Dangers abound on either side of these narrow straits. If you choose to do everything yourself you may very well please your in-house developers but you’ll soon find that you suffer from a terrible case of "not invented here" syndrome; you will in all likelihood lack sufficient scale; and you will find that your costs become uncompetitive. However if you steer to the opposite shore and do nothing yourself you will have no differentiation no proprietary advantage and others will be able to readily duplicate your efforts. Scylla and Charybdis indeed.

To me the course to set to avoid these perils lies in truly understanding the intersection between what your organization can do better than anyone else and how these technologies can advance your business objectives. In the old days you could consider this buy vs.build strategy once every several years or at worst every budget year. Given the exponential development of technology I believe that managers now need to think through these issues on a rolling quarterly basis.

To start with no one should approach technology as a single undifferentiated mass any more than a manager should assume that all his customers and markets are the same. Not even the very best technology companies are good at every aspect of every technology. The key is deciding where to pick one’s spots and how to understand and measure what these specific technologies can do for your business. Too many people fall in love with the leading technology of their era or become infatuated with the plumbing or gadgetry rather than seeing on a more abstract basis what technology can do for a business.

Let me give you an example from the history of Thomson Reuters. At various points in our development pigeons and rowboats represented state-of-the-art technologies which conferred significant competitive advantage. The pigeon story is perhaps the better known. During the mid-19th century Paul Julius Reuter used carrier pigeons to bridge the gap that then existed in the telegraph system between Aachen and Brussels and thereby beat the next best technology (couriers on horseback) in delivering the news as fast as possible. I sometimes joke within the company that old Baron Reuters also invented redundant packet transmission (a feature of some modern routing networks) because he sent two pigeons with identical news scrolls attached to their legs.

Some years later the Baron again introduced a great technological advance in low latency transmission when he engaged an intrepid Irish rower to intercept mail boats coming from North America and row back to shore to telegraph the news to London thereby beating other news services that needed to wait until the mail boats docked in England. It was in this manner that Reuters scooped the London market by hours with the news of the death of Abraham Lincoln in 1865.

The serious point I’m trying to illustrate with these quaint stories is that we are often trapped in and by our current generation’s biases as to what constitutes "technology.” Thus in the mid-19th century pigeons and rowboats represented signficant technological innovations compared to the then state-of-the-art. The key is to focus on the business benefit and value to the customer ("deliver the news faster than the other guy") rather than obsessing over the current methodology.

I believe we can see a modern equivalent of pigeons vs. horses being played out today in the media business. Serious grown-ups are having a hard time making the distinction between quality journalism and the printing of news on paper created from wood pulp. Again the key is to focus on the customer benefit (provide me with information concerning what’s going on in the world that I either need to do my job or enjoy as a form of entertainment) rather than the specific publication technology of the era.

It turns out that publishing news on processed wood pulp paper has actually been a very good and long-serving medium. It has been relatively cost efficient; it provides high contrast highly legible output; and it is easily portable. People forget however that before wood pulp stretched animal skins papyrus and even cave walls once constituted "paper". It should not be too far a stretch of the ordinary imagination to foresee a day when printing with electronic ink on a highly flexible and reusable and probably plastic-based sheaf of "paper” will be seen as the obvious state-of-the-art technology. In fact I’d go as far as to say it will be seen in retrospect that the felling of trees in a Canadian or Finnish forest their transportation using fossil fuels to a paper pulp mill their processing into "paper" via a noxious chemical process their re-shipment in large rolls to newspaper plants around the world their printing with only a single day’s worth of news and their third shipment to your front door or newsstand as a modern “newspaper” will seem like the most counter-intuitive environmentally unfriendly and uneconomic production chain of all time.

So the moral of this story is that companies and their managers should stay as agile as possible with respect to the current generation of technology; they should focus on the customer and business benefit and not the plumbing; and they should be prepared to re-invent the underpinnings of their enterprise. We have too many examples of the mainframe makers who failed to transition to mini-computers; the mini-computer makers who failed to become PC makers and the PC makers who may yet fail to transition into net appliance makers interacting with the cloud. Even the mighty and much hyped cloud will one day pass as well.


My Finnish Sauna

Every year our family spends 10 days or so at our lake house in Finland. This is not a random choice as my beautiful wife Maarit was born and grew up in this watery land of thousands of lakes. (She also reads this blog from time to time so I will earn some serious Brownie points for the prior sentence.)

This year I only managed to eke out a long weekend at the lake as I was working double time during June. Nonetheless it was a welcome break and I was able to cram in my usual regime of fishing rowing biking swimming sauna and beer. As Maarit’s tastes are too refined for beer and the kids are still a bit young this leaves my 81 year-old father-in-law Harto as my prime drinking buddy. This suits me just fine because since my Finnish has not improved much in 21 years of marriage it leaves plenty of time for drinking.

The Finnish lake house has been an important part of growing up for our kids now 9 and 11. They have learned to fish on the lake and then clean and cook their catch; they’ve learned to row and kayak; they’ve learned how to build and roof a small house; and they’ve learned how to prepare and take a sauna. Most of all they have learned how to survive ten days without Wii Playstation or shower. To their great surprise they have learned how to operate a wood-pulp based output device which permits advanced story-telling and requires little power to operate other than a dexterous manual maneuver from right to left.

This year was also the year I was planning to correct one major hole in Walter’s education. His sister Mariana now 11 learned to ride a bike on the soft dirt roads along the lake and now happily rides with her dad. So I explained to Walter it was high time for him to complete this essential part of his education. He was not enthusiastic. I tried a variety of tactics. Legal reasoning: “Any boy who can waterski mono at age seven and score five goals in a league soccer match must be able to ride a two-wheeler” – this is what a criminal lawyer would call a lesser-included offense. Practical fatherly advice: “One day a cute girl will ask you to ride home with her from school and you will wish you had learned how” – Walter reminded me we live two blocks from his all boys school. Finally the ultimate argument: “Your sister can do it and you can’t.” Bingo out we went.

Lance Armstrong will be pleased to hear that there will not be a new serious contender in this year’s Tour de France and I must admit that Walter was not thrilled when I failed to catch him before he skidded into a nasty nettle patch but I am proud to report that he will not be the only boy who cannot ride a bicycle.

My hard work done for the day I returned to perspiring beer with Harto in the sauna.

The Beautiful Game

My son Walter’s spring soccer season ended today – under the rain. It’s as if we never left London. Now I understand how prescient these kids were to name themselves the “Aqua Dominators” at the beginning of their blue-shirted season. The good news is that Walter age 9 really learned how to play the “beautiful game” during his seven plus years in the UK. He does not quite yet bend it like Beckham but neither does he sport any manly tattoos.

Passing the ball must be like underarm hair something that boys must await puberty to master; however there are glimpses of glory. The diving header (or as his English godfather Ed calls it “ ‘it me on me noggin mate”); the deft weaving through three defenders to score; or the diving penalty defense in goal. It’s great to watch your son score the goals you had planned to score yourself but somehow never did. It is also gratifying to watch teammates grow through the season and come to know their foibles (“Oh no not another pass across your own goal mouth”) and their triumphs.

Some of the fathers do get a bit carried away. Pacing the sidelines like frustrated Alex Fergusons (we Barcelona fans like our Fergusons to be frustrated) barking out useless commands to their children (“center the ball” “look for the open man”) or loudly overruling the hapless referee. The best invention in youth soccer is the “silent week” the team played earlier in the season. In those matches no noise is permitted from the sidelines including from the coaches. The idea is to let the kids organize themselves and learn in effect to coach themselves on the field. Not only did the team play well on its own but the parents (yes there are some moms) also learned that a marionette’s string does not invisibly connect their larynxes to their sons’ feet.

Some of the better kids are off to soccer camp for the summer. Walter has his own version –a daily regime of full field one-on-one against his dad. Judging by the spring season this may be the year that son starts to beat dad in one sport after another.

Big Think Video

I recently participated in a series of video interviews with an innovative online service called big think www.bigthink.com. The site describes itself as "a global forum connecting people and ideas."

In a wide-ranging interview I discussed my thoughts on managing risk in an uncertain and volatile operating environment and avenues of growth in professional information businesses.

Rather than transcribe the interview here I provide a link to the video below. In addition to saving me precious typing time this referral might encourage you to explore other more worthy interviews.

http://bigthink.com/topics/business-and-economics/ideas/anticipate-risks-and-create-new-opportunities