Jeffrey Pfeffer on leadership

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I watched the video of his Google talk on his book Leadership BS, where he was interviewed by Karen May, who I think functions in management development at the company. Several take-aways:

1. Management advice is a field filled with baloney sandwiches, which can be defined as opinions not backed by any statistical evidence. Pfeffer is very strong on that point.

2. There is an inherent tension in leadership between doing what is best for the leader’s career, doing what is best for organizational success, and doing what is best for employees. You can never attain perfect alignment of those.

3. Intellectual curiosity is an important but all-too-rare trait at high levels in a company. One symptom is that many executives do not read any books at all.

About minute 32 or 33 of the video, in the midst of all this talk about the need to be evidence-based and scientific rather than base leadership behavior on hunches and anecdotes, Karen May says that Google prides itself on looking at evidence and data in its management approach. The video was shot in November of 2015. Since then, we have seen James Damore fired for exhibiting these traits. Which relates to another take-away:

4. Hypocrisy is pervasive in the workplace, as Robin Hanson could have told you. Pfeffer points out that what leaders say they value and how they actually behave are not necessarily aligned. So before you believe “How to work with Arnold” you should do some due diligence and talk to people who have worked with me.

By the way, here was my route to the Pfeffer video:

The Medium site suggested to me that I would like Ryan Holiday’s list of book recommendations, so I checked it out. These recommendations included Robert Greene’s 48 Laws of Power. I was intrigued by the Kindle sample, but not convinced to buy it. So I researched Greene on Wikipedia, and I found a Wikipedia page on that specific book. The Wikipedia article included a quote from Pfeffer complaining that the book was not evidence-based. So then I looked up Pfeffer. I am going to investigate Pfeffer’s book on power. Meanwhile, when I Googled Pfeffer, I found many YouTube videos. So far, I have only watched the one.

How to work with Arnold

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Stripe Press has launched, with a book called High Growth Handbook, by Elad Gil, about taking a successful start-up through the stage where it has hundreds of employees. Books scheduled for later release include one from Tyler Cowen and a revised edition of Martin Gurri’s Revolt of the Public that includes a forward from yours truly.

I liked parts of Gil’s book. It focuses on an interesting phase for a business–not a start-up, not mature, but in the process of growing from sub-Dunbar to super-Dunbar, from a tribal band to a Weberian bureaucracy.

But I would have been much more demanding as an editor. I would have gotten rid of all the advice that I think is non-actionable, “Make sure you hire a ____ who is smart.” “Don’t do too little X, but don’t do too much, either.” etc. On some topics, I would have pressed for more specific examples, as when the author interviews Patrick Collison, who says

some of these companies–by no means all, but some of them–are in the process of making either major cultural or organizational errors

You don’t have to name names, but at least describe one or two of the types of errors you are talking about.

In fact, I would have asked Gil to devote more discussion to companies that failed in the high-growth phase. What went wrong at MySpace? Netscape? AOL? Napster?

There are some actionable ideas in the book. One of them is for an executive to circulate a document that describes “how to work with me.” If I had thought of doing something like this back when I was in business, here are some things I could have written, some to communicate with my supervisor, some to communicate with people working for me:

1. Don’t give me too many things to do at once. I need to feel like I have my work under control.

2. If you want me to do something that requires my utmost concentration, let me work on it in the morning.

3. If you want me to do something that I hate doing, find someone else to do it.

4. I often give vague project assignments. Push back with clarifying questions, until you know what to do or until I back off because I realize that I don’t really know what I want.

5. When I give a deadline, it is the last possible moment to complete a project. When you miss a deadline, I am devastated. When you just make a deadline, I am disappointed. Get it done sooner.

6. I hate it when people focus on assigning blame. When something goes wrong, focus on fixing it.

7. I like sharing interesting articles and books that I come across. Feel free to do the same with me.

8. I believe in hiring people for attitude and ability, not for experience.

9. The key attitude is being oriented toward solving problems rather than just complaining. I will not tolerate a chronic complainer.

10. I’ll let a software developer get away with being a prima donna*, if you’ve got the right combination of ability, conscientiousness, and stamina. Show me you can really get stuff done, in which case I’d rather keep you happy and let other employees get annoyed than the other way around.

*I define a prima donna as someone who thinks that their superior talent demands recognition and special treatment

Talent effects and inequality

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My latest essay concludes,

In many industries nowadays, small teams of talented individuals can out-compete larger collections of mass workers. Elite skills, reputations, and connections can create barriers to entry that produce high returns. In some important fields, the stars get the best jobs, which in turn enables them to enhance their know-how and their reputations. And the most talented people in one field are likely to work in firms with the most talented people in other fields, creating synergies that increase their rewards even further.

The Fed and Lehman Brothers

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I haven’t read Laurence Ball’s book, but I did see the movie working paper. Ball’s thesis is that the Fed could have and should have lent Lehman the money to enable it to reach a more orderly resolution than declaring bankruptcy at the peak of the financial crisis of 2008.

Long after the episode, Fed officials justified their (in-)action by claiming that Lehman lacked adequate collateral, and that this lack of adequate collateral made it technically illegal for the Fed to lend the amount required. Ball points out that at the time, this legal argument was not used in the internal discussion. Instead, Chairman Bernanke and others were thinking that (a) the Lehman bankruptcy would not cause major new problems and (b) public hostility toward the perceived “bailouts” of Bear Stearns and other firms made it politically dangerous to lend to Lehman.

My own views:

1. I am inclined to cut Bernanke and the Fed officials some slack in allowing them to dissemble about the rationales for not bailing out Lehman. I think that the case against bailing out Lehman is pretty strong, and I am not persuaded by the view of Ball and others that a Lehman bailout would have worked wonders for resolving the financial crisis. Even if Ball is right, I think that the officials’ view that a bailout had low economic benefits and high political costs was reasonable ex ante.

2. The doctrine of “lender of last resort” does not suggest that you have to lend to any particular firm. The point is to provide liquidity in order to keep the crisis contained. So, contrary to what Ball seems to be saying, the Fed could perform its lender-of-last-resort function without bailing out Lehman.

3. During the crisis, I thought that more attention should have been paid to reducing the demand for liquid assets, not just trying to make more supply available. A lot of the “collateral calls” and “haircuts” were outlandish. I would have used jawboning to try to scale those demands back to something more reasonable.

4. I am intrigued by analysis suggesting that the actual banking crisis was more severe in Europe than in the U.S. European finance is more concentrated in its banking system. If every financial institution with heavy exposure to U.S. mortgage securities had failed, the U.S. would still have had a lot of functioning banks and other financial institutions. Not so in some European countries. I don’t think that Lehman bailout would have solved the problems in Europe.

Null Hypothesis Watch

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From a report on a site called Straight Talk, on a study by Dale Farran and Mark Lipsey, who write

Our initial results supported the immediate effectiveness of pre-k; children in the program performed better at the end of pre-k than control children, most of whom had stayed home. The press, the public, and our colleagues relished these findings. But ours was a longitudinal study and the third grade results told a different story. Not only was there fade out, but the pre-k children scored below the controls on the state achievement tests. Moreover, they had more disciplinary offenses and none of the positive effects on retention and special education that were anticipated.

Those findings were not welcome. So much so that it has been difficult to get the results published. Our first attempt was reviewed by pre-k advocates who had disparaged our findings when they first came out in a working paper – we know that because their reviews repeated word-for-word criticisms made in their prior blogs and commentary. We are grateful for an open-minded editor who allowed our recent paper summarizing the results of this study to be published (after, we should note, a very thorough peer review and 17 single-spaced pages of responses to questions raised by reviewers).

Social desirability bias is a major factor in what gets published as research into poverty. That is why even when I see studies that seem to refute the null hypothesis, I am doubtful that they will replicate.

Productivity divergence

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The WSJ reports,

According to data on advanced economies from the Organization for Economic Cooperation and Development, the most productive 5% of manufacturers increased their productivity by 33% between 2001 and 2013, while productivity leaders in services boosted theirs by 44%.

Over the same period, all other manufacturers managed to improve productivity by only 7%, while other service providers recorded only a 5% increase.

Think of a firm as consisting of labor, capital, and intangibles. The intangibles include knowledge and business strategy.

When intangibles hardly matter, then capital and labor ought to be about equally productive across all firms. When intangibles matter a lot, then productivity differences will widen.

Russ Roberts on the outrage epidemic

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He writes,

What has changed is our ability to feed and indulge our tribalism, particularly with news and politics. This new-found ability is the result of the transformation of the news and information landscape. It began with cable news. The internet has taken it to a new level.

As Roberts points out, it is not just that modern media have the ability to stimulate feelings of outrage. They have a strong incentive to do so.

Roberts elaborates on these points in this podcast.

The Trump Administration’s re-organization proposal

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So far, I have only skimmed parts of the reform proposal.

Reorganizations in the private sector have demonstrated that without efficient and effective implementation, even well-conceived reorganizations may fail to achieve the intended benefits. To ensure effective implementation, the President’s Management Agenda highlighted three areas (see figure to the right) which help drive effective organization transformation:
• Information Technology Modernization.
• Data, Accountability, and Transparency.
• People and the Workforce of the Future.

It is a very serious document, which you would not have expected if you only followed this Administration through tweets and media reports.

Of course, I would have liked to see something more sweeping, along the lines that I proposed six years ago. From an organization-chart perspective, the President has over 150 direct reports, and I would have reduced it to eight.

Vacation in the Canadian Rockies

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I was away for a couple of weeks, and I left behind scheduled-ahead posts for that period.

1. I usually have about a 3-day lag between writing and posting, but the lag was longer during the vacation. Also, I was frequently without Wi-Fi or cell service, so I could not keep up with comments well at all.

2. The Canadian Rockies are justifiably a bucket-list destination, although my wife and I don’t maintain a bucket list. We enjoyed the secondary sites much more than the main tourist attractions, in part because the latter were uncomfortably crowded.

3. We could really feel the emergence of the middle classes of East Asia and India. The proportion of tourists from those areas seemed roughly comparable to their share of world population. You will know that Africa and Latin America have developed when you can say the same thing about tourists from there.

4. I thought about sex a lot. No, it’s not that kind of a vacation spot. But the one book I read was Mona Charen’s Sex Matters, which is a critical history of the feminist and sexual revolutions. Now that I have sorted out my own thinking about the battles of social norms concerning sex, I have a new essay on the topic.

Eric Weinstein on Inequality

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Interviewed by Sean Illing for Vox. A couple of excerpts:

I believe that market capitalism, as we’ve come to understand it, was actually tied to a particular period of time where certain coincidences were present. There’s a coincidence between the marginal product of one’s labor and one’s marginal needs to consume at a socially appropriate level. There’s also the match between an economy mostly consisting of private goods and services that can be taxed to pay for the minority of public goods and services, where the market price of those public goods would be far below the collective value of those goods.

Beyond that, there’s also a coincidence between the ability to train briefly in one’s youth so as to acquire a reliable skill that can be repeated consistently with small variance throughout a lifetime, leading to what we’ve typically called a career or profession, and I believe that many of those coincidences are now breaking, because they were actually never tied together by any fundamental law.

. . .A friend of mine said to me, “The modern airport is the perfect metaphor for the class warfare to come.” And I asked, “How do you see it that way?” He said, “The rich in first and business class are seated first so that the poor may be paraded past them into economy to note their privilege.” I said, “I think the metaphor is better than you give it credit for, because those people in first and business are actually the fake rich. The real rich are in another terminal or in another airport altogether.”

Pointer from Tyler Cowen.

I would describe the interview as a set of very interesting threads, which to my frustration are left dangling. I don’t know whether the fault lies with Eric, the interviewer, or the editor.