Face to Face
It's that time of year when CEOs look to brush up on their readership skills. Here, then, meet five authors whose books will help you think smarter--about your company, your family, and yourself--by summer's end
The Return Of Depression Economics, by Paul Krugman (W.W. Norton & Co., 1999)
When Paul Krugman explains recession in his book The Return of Depression Economics, he doesn't trot out regression analyses. Instead, the 46-year-old economics professor leans on an example far from the staid study of numbers: baby-sitting.
Explaining how recessions can bring an economy to a standstill, he offers the example of a baby-sitting co-op in Washington, D.C., in which members would earn scrip for taking care of other members' children. The co-op faltered when members began hoarding the scrip, which could be traded for child care. What resulted was a full-blown recession in which the members of the co-op, eager to baby-sit, weren't spending anything. Ultimately, they weren't earning it either, as the baby-sitting opportunities ceased.
Krugman also plainly explains how industrialized economies can find themselves in economic states that resemble the Great Depression--without actually being in a true depression. If we can recognize the symptoms of decline, he suggests, there are levers that can be pulled to get the economy on track.
One such lever, Krugman would argue, is consumer spending, which can keep an economy that's mired in depression economics from sinking further. So, as a preventive measure, you can do your part by buying a copy of Krugman's 176-page book. While you're at it, buy a few extra copies for your buddies. The economy will thank you. -- Jeffrey L. Seglin
Inc. : When the Asian financial crisis hit and folks were searching for a label, you came up with the term "baht-ulism," playing off of the name of the Thai currency. Are you the only economist with a sense of humor?
Krugman: There are at least three of us, I think.
Inc. : You draw a distinction between depression economics and a depression. How can we have one without the other?
Krugman: If you look at Japan right now, there aren't bread lines or tent cities of the unemployed. It hasn't had the combination of mass unemployment and mass bankruptcies that we had in the 1930s. Japan is experiencing cold-depression economics--not a high-speed crisis or panic, but a slow grinding down of the economy because the Japanese have turned all the conventional valves all the way to the right, and it's not been enough to get the thing moving again.
Inc. : Instinctively, business owners want to make their companies as efficient as possible. You've observed that that might not be the right course to take when faced with depression economics. Why is that?
Krugman: When you're in depression economics, the things that make sense from the point of view of each individual business can be counterproductive from the point of view of the economy as a whole. You can see that very clearly in Japan right now. Japanese firms are inefficient; they're bloated; they have excess labor. You can understand that there would naturally be a push to get rid of workers they don't need and to become more efficient at producing. And in the long run that might be very good for Japan. But in the immediate short run, unless the Japanese start finding a way to push up overall spending, it's actually going to be counterproductive. It's going to cause the unemployment rate to rise. It's going to make Japanese consumers even more nervous. In the end it may actually even reduce profits because while each individual firm's costs go down, its sales may fall even more.
Inc. : You've said that the United States is not now experiencing depression economics. What would be a sign that we've headed into it?
Krugman: One thing would be a market crash that's big enough to cut into consumer spending. My benchmark is always, what if the Dow went back to where it was on the day [December 5, 1996] that Alan Greenspan warned against "irrational exuberance," which was a Dow of about 6,400?
Inc. : Knowing what you know, where do you have your retirement money?
Krugman: I have an actual pension from MIT. The rest is a mixture of stocks and bonds and a fair bit of short-term money-market funds.
Inc. : You're not worried about having money in the stock market?
Krugman: Oh, I'm worried, but we have enough in bonds and in the money market that I'm not going to be selling apples on the street, even if the market loses half its value.
Way of the Guerrilla: Achieving Success and Balance as an Entrepreneur in the 21st Century, by Jay Conrad Levinson (Houghton Mifflin Co., 1997)
You're a CEO struggling to balance your home and work life, Jay Levinson suggests you look at the kitchen sink. Before you balk, think about it: have you picked up a dishrag lately?
While the title of Jay Levinson's book, Way of the Guerrilla: Achieving Success and Balance as an Entrepreneur in the 21st Century (now in paperback), won't stun anyone familiar with his 11 other "guerrilla" books in print, some of the ideas are sure to irk a few readers, such as his insistence that men do their share of the housework. But the most incendiary thought in the book is--are you ready?--a three-day workweek. Many entrepreneurs are workaholics, Levinson concludes, but it doesn't have to be that way. "Guerrillas," he writes, "are much more than earning machines."
Still, it's not Levinson's musings on business and life that sell the book--although he does manage the singular feat of quoting materialist Tom Peters and spiritualist Deepak Chopra on the same page. Rather, it's the tip sheets and tactics--what his fans have always relied on--that make the book worthwhile. The best tip lists in Way of the Guerrilla cover downsizing--not your staff but your marketing ambitions (page 67); delegation (page 146); working smarter with suppliers (page 87); making alliances to boost profits (page 167); and even creative interview questions that can shorten the hiring process (page 133). One sample: "Who are your favorite male and female movie stars?"
If you stumbled on your own answer to that one-- who has time for movies, anyway?--then you'd be well-advised to make time for this book. -- Susan Greco
Inc. : How can the guru of guerrilla marketing suddenly be advocating a three-day workweek? Somehow that notion doesn't fit with the frenetic pace celebrated in your other guerrilla books.
Levinson: Well, it's not really in opposition to my other books. I've been working from my home three days a week since June 1971. Guerrilla Marketing is all about planning, and if people do enough planning, they can free up this kind of time. You've got to be flexible, and certainly I answer E-mail and phone calls on days when I'm not working. But more weeks than not, I'm done with work by Wednesday at 5 p.m.
Inc. : How on earth do entrepreneurs react when you lay this out in speeches?
Levinson: I often get asked, "Can I really accomplish as much in three days?" My answer is, Don't think in terms of three days. Think in terms of what you want to accomplish first of all, then think of the needs of your clients. Once you've got that part down pat, then you can see what you can delegate. My going-in position was never to work a three-day week but to work from home. But when I was protected from committees and meetings and memos, I realized I could accomplish in three days what I used to do in five.
Inc. : Many of your rules for success--not being so focused on growth, not being a lone wolf, valuing free time as much as work time--sound like the way women have been running their businesses for years. Is that just a coincidence?
Levinson: No, I think there is a female advantage in business. Because women don't have as many role models--and not as many workaholic role models--they get to make up the rules as they go along. They also are far more intensely aware of time away from family than men are.
Inc. : You talk about enabling customers to buy from you 24 hours a day, 365 days a year, but doesn't that make it hard to have a home life?
Levinson: Not if you have a fax machine and operate on-line. I recently tried a new travel agent. I E-mailed her at midnight asking for a flight change. By early morning, when it was convenient for her to do it, she'd taken care of it all. This woman left a large agency and is now operating on her own at home, but you'd never know it.
Inc. : The guerrilla entrepreneur doesn't think about retiring, you say, but does he or she have a clear exit strategy?
Levinson: You had sure better have an exit strategy, and that should mean cutting down on work but not eliminating it. You should always do the work you love. Retirement is fatal.
The character issue
Working With Emotional Intelligence, by Daniel Goleman (Bantam Books, 1998)
In 1995, Daniel Goleman produced a runaway best-seller. He also inadvertently gave birth to a mini-industry.
That book, Emotional Intelligence, offered a provocative--and well-supported--thesis about which personality traits are actually the best predictors of individual accomplishment. Goleman, a Harvard-trained psychologist, proposed that such characteristics as self-awareness, empathy, self-motivation, and impulse control mattered more in leading a successful and satisfying life than IQ scores did. Because evidence from the neurosciences showed that one's emotional intelligence, unlike one's IQ, could be improved over a lifetime, much of the book was aimed at teaching youngsters the helpful traits early on.
Given that the book spent 78 weeks on the New York Times best-seller list, perhaps Goleman should not have been surprised to find consultants springing up offering training to help people boost their emotional intelligence. Besides paying consultants, CEOs also looked to the author himself to help them apply his theories in their own organizations. The result: Working with Emotional Intelligence, Goleman's 1998 follow-up.
In it Goleman claims that for all star performers, emotional intelligence is twice as important as purely cognitive ability. Like most business books, Working with Emotional Intelligence primarily uses examples taken from experiences at large corporations. Goleman is particularly--and convincingly--critical of corporate training programs ("the billion-dollar mistake"), which tend to ignore the simple fact that intellectual understanding does not change behavior.
If you're skeptical about the whole notion of emotional intelligence, pick up Goleman's first book. If you're short on time and inclined to accept the importance of emotional abilities--perhaps you've already witnessed the crucial role such skills as building relationships, offering and receiving honest feedback, and being able to sell an idea play in management success--read chapter 1 of Working with Emotional Intelligence, and then check out table 1, in chapter 2, "The Emotional Competence Framework." You can use it as a road map to the sections of the book that most interest you.
But even if you fully embrace Goleman's ideas, don't expect to find your company's fortunes transformed by them anytime soon. Changing behavior, Goleman warns, takes time.
It's worth it, though. After all, as he writes, "Out-of-control emotions can make smart people stupid." -- Nancy J. Lyons
Inc. :If you were going to invest in a young company, how would you judge the overall emotional intelligence of the organization?
Goleman: I'd want to see the level of emotional attachment that key people have to the organization. What the unspoken gripes are. What makes them want to work there even though the money is better elsewhere. If they love the place, they'll stay the course. And give it their best.
Inc. : Imagine that you're starting a new company. What sorts of things could you do organizationally--right from the beginning--to work toward creating a workplace that nurtures emotional intelligence?
Goleman: In that start-up situation, you should begin with yourself. What you have to remember is that leadership has a ripple effect. Your moods amplify. Once you start growing and have employees, they'll be hyperaware of how you handle moods, how you talk to people, whether or not you take the time to get to know them, how you handle customers and clients. All of that sets a style that replicates itself throughout the organization. So you should begin with your own emotional intelligence.
Inc.: You've found that emotional abilities can be learned. Does this mean we can all work on what you call our "emotional competencies" and get better at them?
Goleman: And even beyond that. Follow-up studies--five years later--show not only that those improvements hold up over time on the job, but that people also start to improve on their own in new areas as well.
Inc. : Entrepreneurs often talk about relying on their gut feelings to make decisions. As you've explained it, that's not only a legitimate way to make choices, but a "brainy" way as well.
Goleman: Yes. The areas of the brain involved in gut feelings are far more ancient than the centers for rational thoughts. The site where the emotions of an experience are stored ring the brain stem, especially in a structure called the amygdala, which constantly signals us with information from our emotional memory. Through the amygdala's related circuitry we get a somatic--or gut--response to a situation based on that memory. That response, by the way, is one we shouldn't ignore.
The Cathedral Within: Transforming Your Life By Giving Something Back, by Bill Shore (Random House, 1999)
What's most compelling about Bill Shore's just-published book about nonprofit-sector entrepreneurship is the immediacy with which he chronicles his personal inner transformation. It's as if the 44-year-old author was figuring himself out even as he set it down in writing. While telling his own story, he questions the choices he makes about shaping it: "Writing about one's own children is fraught with danger for many reasons..." begins a section about his offspring.
In fact, Shore's experiences as a parent play a major part in fueling his own growing commitment to cultivate within himself what he refers to as the cathedral-building spirit. For Shore, the founder of Share Our Strength (SOS), a 15-year-old nonprofit group focused on fighting hunger, the craftsmen who built the cathedrals of yore embodied spiritual ideals that modern institution builders would do well to cultivate.
Shore believes that the new "social entrepreneurs"--who are managing underfunded organizations and struggling to counteract the effects of, for example, welfare reform--can draw inspiration from the devoted craftsmen whose fierce dedication and shared ambition enabled them to create wondrous structures that they would never see finished.
Shore counts himself among that courageous new breed of entrepreneurial nonprofit activists, who are willing to deploy such traditional private-sector tactics as marketing partnerships and licensing agreements in the name of creating social change. A sizable portion of The Cathedral Within is taken up with Shore's profiles of like-minded sojourners. But their stories are rarely as absorbing as his own. Given the distance from which he tells them, that effect may be unavoidable--as is the desire, after finishing this book, to read more about Shore's transformation as it deepens. -- Joshua Hyatt
Inc. : You've grown SOS under less-than-ideal circumstances: high turnover, low pay, chronic funding needs. Do you ever wonder what you could accomplish at a for-profit enterprise?
Shore: There was a point earlier in my career--before people realized that I was as wed to this as I am--when there were options to do a range of things, from running some entertainment ventures to managing more traditional Washington businesses, like lobbying. The idea of having a few thousand options for shares of stock in something has been tempting. But we've tried to show that you can do this kind of work and live a good life, one that doesn't require you to sacrifice in terms of material needs. And I would like Share Our Strength to get into more for-profit businesses.
Inc. : How worried should private-sector entrepreneurs be when they hear you make a declaration like that?
Shore: I know there are sometimes complaints about this from small businesses. YMCAs can price their product much more inexpensively, and that drives private health clubs crazy. Nonprofits will have to compete fairly, and it will be up to policymakers to decide how to make that happen. We already have a for-profit consulting practice, Community Wealth Ventures, and its after-tax profits come back to SOS.
Inc. : How widespread is the practice of nonprofits' creating successful profitable businesses likely to become?
Shore: It's not yet a garden-variety thing that people understand can be done. And it's an area where there will be some market leaders who will get some attention. Still, I've been to five conferences about it in the past 2 years and none in the previous 10.
Inc. : Is that an indication that the nonprofit sector is successfully luring people who have the skills to build for-profit businesses?
Shore: We've got four people at SOS who are in the process of getting their M.B.A.'s. Ten years ago I literally couldn't have named a person I knew who was in business school. Now there are many schools offering concentrations in not-for-profit management. It's just like in the 1960s, when a lot of people thought a law degree would be useful in working for social justice. Nowadays a lot of people think a business degree will be a valuable tool.
Chain of command
Clockspeed: Winning Industry Control In The Age Of Temporary Advantage, by Charles H. Fine (Perseus Books, 1998)
Clearly written and short, Clockspeed may become the feel-good book of the summer because of the astonishing trick it performs: making the business world make sense.
Charles Fine, a professor at MIT's Sloan School of Management, links the idea of chaotically rapid innovation (measured in terms of "clockspeed," the rate in each industry at which new products, processes, and organizational structures are introduced) with a reappraisal of supply-chain management to yield a fresh way of understanding how and why businesses succeed or fail. Even better, Fine explains how managers can use such insights to make smart, practical decisions about which of their companies' tasks to outsource and which to keep in-house--in other words, what to make and what to buy.
Supply-chain design, as Fine calls it, is "the ultimate core competency" of enduring companies, which develop the ability to predict which capabilities in a supply chain will matter most to them. An infamous example of bad supply-chain design? IBM's decision to farm out the microprocessing and operating-system pieces of the PC supply chain. As Intel and Microsoft shareholders, as well as the U.S. Department of Justice, know, the strategic power and biggest financial rewards in that supply chain didn't end up in the hands of the folks who shipped the final product.
Unlike Big Blue, few companies have the resources to survive such a serious miscalculation--which is precisely what makes Clockspeed such a welcome and valuable tool. -- Michael Hopkins
Inc. : You say that small or new businesses can spot market opportunities by looking at industry supply chains. How does that work?
Fine: Industries oscillate between periods of vertical integration [when a few large companies own more and more parts of the chain] and vertical disintegration. Entrepreneurs should watch for industries that are about to turn to disintegration--ones that have a few dominant players that are slowing down owing to sheer size while the underlying clockspeeds of innovation in the industry are not slowing down. That's where the opportunities are for little guys to jump in. And that's the scenario venture capitalists want to hear about.
Inc. : Which industries are heading for disintegration right now?
Fine: Pharmaceuticals is one. Thousands of little boutique biotech and pharmaceutical service companies are grabbing pieces of the drug-development process, whereas 5 or 10 years ago the whole industry was the purview of a handful of giant corporations. Other industries: Internet service providers. Think of how many ISPs there are now. Also on-line retailing. Even if you buy the argument that on-line retailing is coalescing around a few portals--the Yahoos and the Lycoses--the number of companies gathered together on the next level down from the portals, the companies providing actual retail goods and services, will explode.
Inc. : You say venture capitalists use supply-chain analysis as a tool. How?
Fine: I've heard from many of them that they now say to founders, "If you can't tell me a convincing story about what supply chain you're in and how you fit into it and how you'll add value instead of being a commodity in that chain, then you're not going to get any of my attention."
Inc. : But chains are always in flux, aren't they?
Fine: Right, so your story has to include projections about how you see the chain evolving and why you think you're catching the right wave at the right time.
Reader: Michael May, CEO, Empower Trainers & Consultants
Technique: May, whose $6.5-million company is based in Overland Park, Kans., has reason to believe the inventory of books he's stockpiled for summer reading will stack up well against anyone else's stash--or against anyone else, period. May, who admits to a passion for tomes elucidating such subjects as Russian history, has compiled an impressive 40-volume backlog to read over the summer, including on a two-week respite at Lake Tahoe. Although he makes no claims to speed-reading, May fully expects to improve his ability to scan.
Current titles: To Russia with Fries: My Journey from Chicago's South Side to Moscow's Red Square--Having Fun Along the Way, by George Cohon, and Matsushita Leadership: Lessons from the 20th Century's Most Remarkable Entrepreneur, by John P. Kotter --Anne Marie Borrego
Reader: Patrick Spain, CEO, Hoover's Inc.
Technique: Spain, whose $9.4-million company sells on-line business information covering approximately 14,000 companies, digs deeply into corporate histories even when he's not on the job. He's recently gobbled up Selling 'Em by the Sack: White Castle and the Creation of American Food, by David Gerard Hogan. Still, he claims he's planning to use his next vacation to diversify by delving into best-sellers by Tom Clancy and David Baldacci. "Of course," he adds, "that's assuming that I get a vacation."
Current titles: Morgan: American Financier, by Jean Strouse, and Titan: The Life of John D. Rockefeller, Sr., by Ron Chernow --A.M.B.
A real page-turner
Reader: Allyn Kramer, CEO, Kramer Lead Marketing Group
Technique: Just now Kramer isn't reading a single book--then again, he never is. That's because he habitually reads several books simultaneously. "I can't even hold still long enough to read one lousy book," grouses Kramer, whose company, in Dallas, provides direct-mail services. "That has got to be an entrepreneurial thing."
Current titles: Masters of the Universe: Winning Strategies of America's Greatest Deal Makers, by Daniel J. Kadlec; Getting to Yes, by Roger Fisher and William Ury; and Customers for Life, by Carl Sewell and Paul B. Brown --A.M.B.
Reader: Gena H. Reed, president, Paragon Biomedical Inc.
Technique: "The only way I can get my mind to stop is by reading fiction," says Reed, cofounder and president of Paragon, headquartered in Irvine, Calif., which supplies research to large pharmaceutical and biotechnology companies. Reed unwinds with a novel every evening, as well as on weekends and on trips. She favors such mystery writers as Martin Cruz Smith and Michael Connelly.
Current titles: We Are Our Mothers' Daughters, by Cokie Roberts; and Into Thin Air, by Jon Krakauer --A.M.B.