confusion by ~dekert

I just noticed that it has been over a year since my last post. The past year has certainly not been uneventful. Quite the opposite… Family is doing well; work is going fine; life is beautiful. On the surface everything is exactly as hoped and wished. I am thankful for that.

Below the surface strange tectonic shifts seem to be causing some confusion, fuzziness, and dizziness. I have not written because of the strange but complete realization that there is nothing(?) new under the sun. Even the unique experiences of the past year seem common and unworthy of mentioning in this blog with the word legacy in its title. The world seems irrational, the markets all over the place… Confusion for me is an unusual feeling and hopefully only a temporary visitor. I am still the same person, organized, with razor-sharp focus on achieving goals long and short term, ready and able to work very hard to get there. Or am I? Has something changed causing me to doubt that those goals and achievements matter? The drop of water in the Pacific or the tiny plankton in the Atlantic probably matters far more. But then again, maybe we all have our exact place in the great machinery of the universe existing to lift a lever or say a word at exactly the right time for some other lever to be lifted or pushed according to some predetermined path completely beyond our comprehension. Does the tiny spec of sand ask questions when the great winds take it from place to place in the desert? Does it even matter where exactly we are in this vast desert?

Then I wake myself up with the thought that even these thoughts don’t matter. Let’s just get back to work, back to living, back to raising kids and back on with our lives. Today was a great day, tomorrow will be another.

This video of one of the greatest poets of all time Paruyr Sevak says everything that must be said. What else can I write to add to what he has already said.

What else does one add to the countless books already written and (in this digital age) pages written every day. There is perhaps the unique experience shared with a special one or with those we hold dear and close to our hearts. But then what does one write about those experiences. A look here, a smile there, a funny word – turn that into a post – a post of legacy.

Progress by ~gursesl

When I catch myself thinking about something worth sharing, I take down a few sentences to come back to them in a future post. A few days ago, I wrote “An interesting longer term cycle seems to be repeating. We all learn something new every day but from time to time I find myself having the urge to learn a new discipline, new subject, or a new profession. The learning process is very exciting as it brings renewal and new ways of understanding the world. One such wave caused me to start learning English. Who would have thought where that effort would lead years later…” This morning I saw a comment from GM Davies where he says “Well I think that one very good thing to do right now is to invest in oneself. Whatever comes out of this people with certain skills and know-how will always be needed.” I couldn’t agree more but will take that comment a bit further by replacing “right now” with “ALWAYS.”

I have been working on a small project recently. I’m “writing” a small piece of software to automate one of my Excel spreadsheets with a goal of learning four or five new web technologies. The outcome may be less useful than the Excel spreadsheet but the learning will be worth it. If in addition, others find value in the outcome, then I’ll have more than achieved my objective. I won’t go into the details of it until I have something to show. But wanted to mention a couple points.

Learning does not happen overnight. This project is progressing very slowly and the result so far is nothing exciting or spectacular but I continue to spend a few minutes here and there as much as I can. Inch by inch, one small improvement at a time, I learn a new option, a new method, and a new statement. I often learn something new and find myself hitting the proverbial brick wall discovering that I need to redo a lot of what I have already created. Obviously, if I had all the knowledge up front, I would avoid the mistake in the first place, but that is the price to pay for learning the lesson. This process in many ways is similar to value creation and research, one step at a time with frequent setbacks but never getting discouraged to the point of quitting due to personal limitations. Learning lifts those limitations but does that in slow subconscious way.

The other thought I wanted to share is that of digesting knowledge created by others. I often have to refer to a web site or a sample created by someone else to figure out how to accomplish my task. It takes me ten seconds to find and use the knowledge that someone spent hours creating. Very often I jump from one site to another in fifteen minutes “digesting” many hours of the work of hundreds of people. Imagine that! How many people take a moment to think about the hundreds of people and the months / years of their life that go into creating a two hour movie? I said this to my father who after devoting most of his life to astronomy expressed some regret that “… all that work was for nothing …” It is not for nothing! His work is all over the Internet, referenced in many recent papers. We can never predict how the value we create will be compounded by others. The lightning speed by which new information, new knowledge, new thought (this post for example) gets absorbed by others and becomes part of them is absolutely fascinating. Credit is not always given, the source is often forgotten, but humanity progresses and we all fullfil our individual role in that constant march toward our combined ideals.

Down is Up... by ~Dsva

I was the summer intern at Eaton Vance, in the Strategic Income Fund team a few summers ago. Taking my job very seriously, I did everything to make sure that my duties were carried out to absolute perfection with attention to every detail. After a few weeks, the team got used to having everything in order; and I realized that I had created a process where I could have a few hours free at the end of every day to ask questions, check the markets, read the hundreds of research papers that came to our group, and learn. I tried to learn as much as I could from this small group of very bright people who managed two mutual funds.

At the end of the summer, I received Victor Niederhoffer’s book The Education of  a Speculator as a farewell gift. In addition to all the wisdom in the book, there are a few notes inside the front cover and the farewell card.

“From one amateur speculator to another…”

“I’m sure you’ll succeed in your American adventure…”

…

“I hope you’ll know what Victor means – come back and visit when you’re rich…”

“I expect you to surpass the achievements of George Sorosanian without cutting corners like Michael Milkenian…”

“Just remember the market could go up or it could go down…”

Over the years, I have often remembered these last three parting wishes. I have not visited them yet and will probably not visit for quite some time. I’m still working on the achievements but having just read The Crisis & What to Do About It by George Soros, I have a long way to go. And there’s not a day (especially today) when I don’t remember the last reminder…

TOOBS for stock by ~Mydin

I was thinking during my commute how quick the integration of new discoveries is these days. Perhaps it’s another side effect of easy information that new products, new inventions, new processes and new methods are analyzed, internalized, and digested so fast. Take the iPhone, for example. It has been around for a couple years, yet there are thousands of little programs for it already. I am sure that in another year or two, it will be added to the list of ancient technologies such as floppy disk, MS-DOS, short-wave radio, light bulb, screws, wheels, etc. To be sure, most technologies are still in use today but they have been internalized by us to the point where we rarely consider the human efforts, sacrifices, and trials that went into their initial births.

Three thoughts come to mind. First, never give up. It may take years to develop a system, a product, or to study a new force, new genetic mutation, new cancer cell, or write a great book. It may take a lifetime. People may argue, disagree, dismiss your work. They may misunderstand, misrepresent, take credit, discredit what you do. But from my history lessons, nothing major and meaningful was ever born overnight. One thought leads to another, one work makes it feasible to create another. That’s the process of development. What we see in the rear view mirror is the mature internalized, accepted, perfected result of many lifetimes of hard work.

Second, we all have some talents. My father says that great people are born with these special talents. He says although we can go to schools to learn how to write like ՎԱՀԱՆ ՏԵՐՅԱՆ, very few will be gifted with that special fragrance that he breathed into his poetry. Sure, but I also believe we each have our own unique gifts. It is a matter of early discovery and a lifetime of hard work. Again, in hindsight all we see are the jewels left behind by the greats. We do not always see all of the trials, failed attempts, discouragement, disagreements, and the hard work they endured. A classmate from elementary school writes beautiful poetry almost daily (who would have ever expected) but also lives a routine that would seem impossible to most. With God’s gift, and lots of hard work, I can envision a book in the horizon. I am sure it will be anything but easy.

Third, when you make it do not be disappointed when it’s quickly integrated into the civilization or the culture. The new method that was developed after years of hard work may become a standard routine so elementary that is taken for granted and almost forgotten. Sometimes the greatness is not appreciated for a generation or two. Often the impact is profound in many other areas of life not imagined initially. I am thinking of the Internet Protocol, for example.

As for me, I’ll be busy thinking much, learning much, observing much, experiencing much and, of course, expressing much…

Mona Lisa by Leonardo da Vinci

Heavily used machines are considered great when the quality of their output is constant with no statistically significant variances over time. In other words, they consistently produce according to their exact specifications especially long after the end of expected useful life. We, on the other hand, cannot simply maintain good quality in what we produce. We must continuously show improvement in our results (such as progressively advancing resumes, higher levels of education and achievement, etc.)… and many of us do.

Few artists are able to produce top music hits decade after decade. Few authors’ every work is considered a timeless classic. Few portfolio managers can beat their benchmarks through every market while improving against negative factors such as portfolio growth and constantly changing socioeconomic and geopolitical landscapes. Few Olympians maintain record scores for decades. These people represent the tail of a bell curve that’s infinitely approaching zero.

Unfortunately this also applies to companies (and teams, governments, organizations). Few of them have been or will be around for decades and even fewer for centuries. Why should companies be any different, especially given that even with 85% employment, they in aggregate are employing the very large majority of the human bell curve? Why should we expect more from them?

One reason is that they have the advantage of diversification. If each member in a team of five members has only one great product idea, one great initiative, one great article, then the team has potential for five great achievements. Therefore, a company with five such teams has enough potential for twenty five great achievements, products, or services at a minimum. Some companies also have the advantage of hiring top talent in the first place who have the potential to produce far more than one great work over their lifetime. Great companies, with thousands of employees should have thousands of great new accomplishments that should last them for centuries. Especially since their workforces change over time with each change bringing fresh new perspectives and strengths into the mix, they simply have no excuses to arrive at a place where, for example, the US automakers and the financial services companies before them found themselves these days. Maybe it’s a sideeffect of satisfaction with performance that meets or exceeds expectations. Instead, perhaps we should see ourselves and everyone around us as people who are two, or five steps away from the great breakthrough, the achievement of a lifetime, our one (or more) contribution to human progress. I’m sure once we achieve that, we will invariably want to keep going for more…

Newton's Laws by ~bananagram

Isaac Newton’s three laws on motion are fundamental in classical mechanics in physics but I think they also apply just as strongly in our daily lives and our relationships. Let me draw the parallels and let you decide. Is it possible that if we applied these in our lives, we would be able to achieve a new level of harmony and tranquility?

“A body continues to maintain its state of rest or of uniform motion unless acted upon by an external unbalanced force.” ~ Newton’s First Law

An entire book could be written about the applicability of this law in our lives. We remain in the same state of mind unless we open our minds to external influences. Our relationships remain the same unless we apply some forces to change directions, change attitudes, or change the environment. Our environment will not change unless we apply external forces to improve it. Governments, companies, organizations continue in the same path unless a force of change is applied to them. Many more examples can be given here but some opposites are also true. Preservation of a current state may require significant forces to counter-balance the effects of negative forces. Upholding the United States Constitution requires daily work of many people and in some cases fights against injustice, improper applications, and incorrect interpretations. Maintaining a happy family requires pushing back on all negative influences getting in the way. Maintaining positive outlook in life requires working hard on our inner mental state against negative external influences. Let’s look at the second law.

“F = ma: the net force on an object is equal to the mass of the object multiplied by its acceleration.” ~ Newton’s Second Law

Our effectiveness is equal to our substance multiplied by our hard work. Stated differently, if we are not smart and strong, we must work harder to have the same results. As organizations, the teams we hire determine our success because for the same amount of time/work, we must achieve higher results than our competition. As countries, the stronger our individuals, families, communities, and organizations are, the higher our chances of counter-balancing negative forces of nature and calamities. Also, note that it is acceleration rather than velocity that matters. The faster we move, the more we produce, the more we learn and the faster we learn, the stronger our force output becomes. People with integrity and substance have a higher chance of having a lasting impact than those who lack these qualities. The third law is my favorite.

“To every action there is an equal and opposite reaction.” ~ Newton’s Third Law

I think of this as the Golden Rule in Christian culture. Treating others the way we want to be treated is so fundamental that it’s actually a law in physics explaining the motion of objects large and small. In times of war, the party with the greater force overpowers the opposite side because of an unequal opposite reaction. However, couldn’t this also be true inside our families? If you want something in your relationships, perhaps you should be first to give and then maybe this law of physics will kick in and start working. The examples here are endless. Unfortunately, we are humans and are more complex than objects (check out tit for tat for example).

The world is a complex place but these laws have simplified much in the world of mechanics. Perhaps, they can help simplify something in your world as well. If you came here because you were searching for examples of application of Newton’s laws in daily life, please leave a comment and let me know why you were curious.

Unless you are working on an antique car that appreciates in value over time or fix cars for a living, I think any time you spend on the car is worth only the present value of your time. On the other hand, let’s say you spend time on your business, career, or investments, this time can and will certainly pay dividends later in life.

Almost weekly I cut the grass and every time I feel I’m completely wasting two hours because the future value of this time is about as close to zero as it gets. To have someone else cut the grass would unfortunately cost more than we can afford now. So, my challenge is to continue investing in activities that pay dividends in the future, so I don’t have to waste time on this every week. Time spent learning something new, on the other hand, can have huge benefits (often unforeseen) later and usually when least expected.

Next time you’re working on something consider if the object will appreciate or depreciate over time. That’ll help determine the amount of time investment you should make. Appreciation includes both financial appreciation as well as non-tangible appreciation such as physical, emotional, and spiritual appreciation. One lesson I’ve learned while writing this blog is how much of our days are spent on “noise” and how little of what we do truly deserves to be retold. I hope you make it your challenge as I have made it mine to fill up your life with what really matters and leave the rest to everyone else.

The first time I seriously thought about this was when I was fixing a closet door at my wife’s late grandmother’s house a few years ago. The brother of my wife’s grandfather was there. After observing me work, he said (more or less) “You do good work but you must learn to slow down.” I discounted the comment a bit but… continued thinking about it without fully understanding his words until years later.

Last week, the contractor building a staircase for us had a couple guys nail the threads on the stringers with a nail gun ruining the stringers. To an untrained eye the job would look completely fine but when I saw it, I had serious issues. The contractor said he’d fix the situation after he realized what had been done. In his case, someone else’s haste resulted in his waste.

Another example is the case of using old work as backdrop for new work instead of treating new work as a completely unrelated project to old work. In the case of the staircase, the contractor used the existing stringer to trace the new 2×12 lumber thereby transferring the issues of the old stringer onto the new and leaving him without a reliable measurement for future. Had he kept a reliable measurement, he’d have saved himself a lot of time while remedying the situation. The concept of “reuse” in the corporate world usually has the same effect. You may argue that if everything had to build as new work ignoring old work (not reusing) that would result in less efficiency. Of course but efficiency is also decreased by waste.

Without getting too technical, in my opinion you should slow down to the speed of doing a good job. I have become much more confident in my own abilities ever since I realized that I had the skills for almost any job but lacked the discipline to find the right speed, the right tools, and the right advice. Now, projects are only a matter of time for me. And time is what I lack most. So, I do not have the luxury of rushing and making waste.

I was thinking this morning about what I would want to see in someone the most if I had to hire them into my company. In my mind I went through the long list: proper skills, education, relevant experience, career progression, etc. And after about 30 minutes of thinking during my commute, I settled on integrity defined as “adherence to moral and ethical principles and values; soundness of moral character; honesty” as the most critical requirement. Can you think of any other as being more important? Would I hire someone who’s excellent at what they do but has no integrity? What about someone with thirty years of experience with low integrity? How about someone who is a PhD but has not flexed his integrity muscle? You get the point.

My next thought was if integrity is so important then why is it not the highest on the list in interviewing books and workshops. Why are tests to measure integrity not prevalent in everyday hiring? I am not aware of any school classes or college courses that specifically look into this subject in depth (aside from the standard ethics course). I propose that next to basic financial education in our school system (also currently missing), there must be systematic education and exercise of the integrity muscle. I further suggest that special parent education exist on upbringing of children with strong moral character. Today this effort is handled largely inside our families with little external support. Certain organizations also help but parents do not always participate and sometimes cannot even afford the time or the expense of joining these.

Perhaps with greater emphasis on integrity, politics would improve. I would go as far as saying that international relations would improve but that might take a generation or two. I am no saint but I try to adhere to my own rules and it’s actually pretty hard. I hope you can also see the many benefits of integrity all around you.

Let us assume Jane the director is responsible for two managers Bob and Joe who in turn are responsible for ten employees each. Mary the top performing individual contributor in the group also reports directly to Jane. Assume Jane has to distribute bonuses to her organization but she has been told that 20% should get nothing to ensure that the top performers are rewarded as best as possible. How should she go about it?

Option 1: Jane can distribute the bonuses directly to everyone. This might seem easy and the logical way to distribute the money but I feel this is completely unfair because chances are she would not know the full extent of the contribution of each individual in a large organization. Furthermore, she will most likely demotivate her managers Bob and Joe by excluding them from the decision making process. In order for this process to work, she must make sure that the performance of each individual is evaluated fairly and is well documented prior to the reward distribution. Performance evaluations must include feedback from peers, managers, and employees. Without this thorough evaluation any distribution is based on subjective judgements and more recent performance of an employee rather than the performance during the entire time horizon for which rewards are distributed. She must clearly communicate her reasons for using this method to Bob and Joe, the managers in her team. In any case, she should never ask one manager to compare or rank employees in his team against those in another team. This comparison is highly subjective, incomplete, incorrect and demotivates both managers, and their employees in the long run.

Option 2: She can evaluate the performance of the teams and reward each team accordingly giving the responsibility to distribute the bonuses between team members to her managers Bob and Joe. This method empowers Bob and Joe to manage the way they consider best. Along with empowerment comes the responsibility to deliver the best results possible. Empowering people also creates loyalty and trust. Even with this option, it is a good idea to complete thorough performance appraisals prior to distributing rewards. The fairness of the reward is better understood and appreciated after an appraisal discussion with an employee. With this option, Jane can also save some of the pool to reward the performance of her star performers.

Option 3: Jane can meet with Bob and Joe and attempt to determine how to best distribute the reward. Unfortunately even though this may seem like a fair process, Bob and Joe cannot help determine how to fairly distribute the rewards because they are impacted by such distribution. This process is a zero sum game where Bob’s win is Joe’s loss. Such a situation must be avoided because it promotes internal competition which takes away energy, time and resources from competing externally and progressing the tangible results of the organization.

Distribution of rewards must be carried out very carefully to maximize the motivational impact of such a process. Expectations of the recipient play a critical role in this process. If an employee expects a 20% bonus but is given 15%, this will demotivate her. If she on the other hand expects 10% but receives 15% she will be pleasantly surprised. Factors such as past reward history, current performance, external market forces and personal situations affect employee expectation. Managers must realize that rewards in a workplace are similar to grades on a school paper. The manner in which the process is carried out usually matters more than the actual rewards that are being distributed. Even if the final amounts are greater than expected, the process by which they are handed out still can significantly impact both employee and manager perceptions. Finally, motivating managers is just as important, if not more important, as motivating individual contributors.