I have been blessed by great teachers and parents who have helped to inculcate a growth mindset. One that I didn’t know I have until I started meeting people and getting to know several friends deeply. And more drastically, I realised that some of my cousins or even sibling do not always share that same sort of mindset. That this can be so radically different, I didn’t think much of until I chanced upon Bill’s article on Inc.
It is scary when I realise how those with fix mindset think of effort as a bad thing! Though I can appreciate or empathise with those who might think of failure as bad. Somehow, I appreciate the importance of viewing challenges as problems and I always thought these things came by chance! Nevertheless, there are still problem-solving types who flinch at the prospect of failure. These things build on each other; one who believes in nature more than nurture is forced to think that when they are bad at something they will not be able to change that. They would also thing that the need for more effort or tediousness of things is a signal to give up rather than try harder. This is a logical implication of believing that abilities and ‘talents’ are innate and not developed.
Through the article, I was reminded by how my Dad often exclaimed that I was good at such and such because I worked hard whilst he praised my sister saying that she is actually really much smarter than me. This actually got into me as a key belief. I noted that while I may never be able to be ‘genuinely smarter’ than my sister, I could still achieve more and do more. At the end of the day, the label for our identity falls away and the focus of our lives should be on what we actually do – not even what we achieve but simply, what we do.
In Chapter 16 of Rolf Dobelli’s ‘The Art of Thinking Clearly’, he talks about the emergence of ‘Chauffeur Knowledge’ – a term Charlie Munger used to differentiate it from ‘Real Knowledge’. Chauffeur knowledge is the sort of knowledge you need to put up a show: it may be to feign expertise, to engage in a conversation meant to impress or merely to deliver information to targeted audience. For example, the news anchor who goes on TV to deliver the news may not exactly know fully what he or she is saying in terms of the full implications of the news nor the exact circumstances leading up to the news. Or the taxi-driver who gives his assessment of the global economic situation based on anecdotal evidence from his experiences driving around New York.
Yet there is increasingly more insidious types whose chauffeur knowledge is difficult to tell apart from real knowledge. We want people with real knowledge about the economy, about policy implications, with a real sense of the politics out there to lead the country – not someone who pieces together random pieces of information out there on Fox News or CNN to formulate views on politics or economy. We need people with business acumen for a large organisation to be the CEO – not merely someone who can show and tell well in front of shareholders. The show and tell skills are useful but only to a certain extent; this phenomena of the rise of a chauffeur knowledge economy is a result of incentive super-response tendency (Chapter 18 of Dobelli’s book) and also Outcome Bias (Chapter 20, ibid).
Incentive super-response tendency relates to people behaving hyper-rationally to incentives such that the behaviours are no longer in line with the original intent of the incentives. Managing such consequences is harder than it seems and it can generate a lot of unintended consequences. For example, the original intention of rewarding comrades bringing in dead rats in China during the times of rat infestation was distorted when people started breeding rats to kill in order to earn the reward. Likewise when CEOs are rewarded based on quarterly earnings results, they start being short-term and divest of strategic assets which may be making short-term losses. Worst still, such salaryman CEOs may even relinquish core capabilities that helps enhance returns on asset in favour of building up a larger base of income-generating asset base, without realising that those core capabilities are necessary to maintain and ensure returns on the asset.
It is not always malicious so to speak; and honestly, employees do not have perfect foresight on how their action impact on the organisation in long run. They could be counting on securing the short term benefits for the organisation since the longer term ‘strategic benefits’ may be uncertain. Or more significantly, they would not materialise as quickly nor in time for them to reap the benefits.
The combination of this two ills plaguing the modern world are making our corporate world, public service, non-profit and all kinds of organisations ripe for disruption. What new management innovations would rise up to challenge this state of affairs? Something to ponder over.
Solar Power have come a long way. Now that solar power tariffs have been bidded so low they are matching the cost of a natural gas plant, it is believed they are finally delivering real value. With feed-in tariffs that are above US$0.05/kWh, governments are losing money for every kWh of power generated by solar – or put it another way around, taxpayers or consumers are paying extra for electron movements that are no different from that generate via other means. Assuming that carbon trading and carbon taxes have been applied, solar power was, until recently, destroying value.
Yet solar panels have finally reached such a cost that electricity tariffs from solar power could match that of more conventional thermal power plants; so despite the ‘losses’ from the past, solar PV technology has finally reached the goalpost we had all intended for. Solar power however, provides a huge challenge for financing as its cashflows presents an interesting profile with negligible operational costs implying that the bulk of the costs in the lifecycle of the plant is upfront. This makes it extremely sensitive to estimated performance through its lifecycle, the lifespan of the panels as well as the cost of capital. I was surprised however, that this single kind of infrastructure project attracted so much private capital as highlighted by the McKinsey article.
The high feed-in tariffs and good returns must have played a part but investors ought to realise that the sustainability of high tariffs needs to be considered. With high tariffs being committed for technologies not proven and improving radically, there’s a real danger of governments failing to honour their tariff promises, thus compromising the returns expected of the older projects. Therefore, high returns ought to be viewed with some measure of skepticism in terms of the expected ‘actual returns’. With much lower solar panel costs and such competitive tariff bids coming up especially in the Middle East (partly due to good solar irradiance which means any solar panels deployed there are used more intensively), governments are tempted to simply renegotiate contracts – or just ignore them eventually.
So the fact that we’ve hit US$0.03/kWh for solar is great news – and the true value is finally beginning to be accrued by those who have fought long and hard to get solar panels up and doing good for the world and for man.
My boss got slightly philosophical for a bit and lamented that infrastructure developments follow not the pace of the fundamental demand for infrastructure but simply the fiscal plans of government. Traditionally, infrastructure belongs solely to the domain of the government. The vast amount of capital needed was typically only mobilised by governments in the days when economies were much more domestic and cross-border capital and investments were heavily channeled towards industrial output and real estate assets rather than infrastructure.
In fact, through the recent downturns, all the talks about infrastructure seem not to stem from the need for infrastructure to catch up with growth and development but for fiscal investments into infrastructure as a means of generating growth. Even Knowledge@Wharton wrote any article co-opting this viewpoint. Yet for most part, this is largely a kind of illusionary financial play – actual growth can only really be generated out of making fundamental, strategic investments that will support the growth of those areas that will boom when the demand uptick arrives.
Assuming this, is a downturn still a good timing for governments to do infrastructure or to invest in infrastructure? It critically depends on financing costs; and in a climate where governments have flushed the entire world with liquidity and max-ed out their monetary policies, financing costs have been artificially reduced for a while. Nevertheless, the fundamentals will still have to be matched: infrastructure projects that taps on cheap financing will ultimately need to have the proper guarantees and safeguards to the lenders in order to match the kind of returns profile of the appropriate lenders/investors.
Organic Growth for companies. Most of our Singapore’s small medium enterprises grow organically despite the introduction of much Merger & Acquisition support from the Singapore government such as M&A Tax Allowance (which was enhanced following the 2015 Budget) . In challenging times, even larger companies may still want to conserve cash to be invested internally rather than go on an M&A ‘spree’ – that is if they believe that they will be able to emerge larger after the temporary downturn.
To the end of doing the tough stuff called sticking to organic growth, McKinsey has a couple of pretty good questions to ask oneself when planning strategically for value creation along short to long-term timescale.
How balanced is our portfolio? If we take our portfolio of growth and innovation initiatives and plot them against NOW NEW NEXT, how balanced does the distribution look? Do we have a perspective on which of the six “growth plays” would be successful in our business?
Who is thinking about disruption? Are we as systematic in NEXT as we are in NOW? Is anyone tasked with disrupting our core business—or are we leaving it up to competitors? What are we doing to explore additive business models?
Are we limiting our horizons? In exploring NEW opportunities, do we impose limiting mind-sets on how we define consumers, our category, or the addressable channels?
Do we use advantaged insights? Do we rely on the same data and insights as our competitors—or do we have a source of distinctiveness?
Are we agile enough? Have we been able to accelerate our time-to-consumer and time-to-market? Or are we still stuck with cumbersome and slow innovation processes?
Ultimately, these questions may also start leading companies to consider acquisition in the mid to long term horizon where threat of disruption may force even very niche companies to place some hedging bets through incubation of related peripheral technologies.
We get burnt out not so much by sheer hard work or exhaustion. Most people who work and work and eventually gives way, either through Karoshi (death from exhaustion) or committing suicide; not so much because they are being made to do more and more. Too often, it is because work life involves many things that one may not be comfortable with. And I thought to highlight a few matters that I find really burns people out.
Misrepresentation: Whether it is figures or qualitative facts, work in modern world often involves some form of distortion of truth (which is not necessarily outright lying) either to fit a narrative or make a case. This simply doesn’t sit well with our natural inclination towards truth and in long run, one starts doubting not only the information they receive but also themselves.
Buying into worldly motivations: Frankly, while we know that we are not genuinely motivated by colleagues’ recognition or money, but these are rewards of life that seem a lot more within grasp than the elusive feelings of security, affirmation from friends/family. So we work for the easier fulfilment and realise only later they do not fulfill.
Lack of completeness: The breakdown of work into bits and pieces that increases productivity makes all crafts just a series of tasks handed out to different stages of work. And as a result, most of us are only involve in part of the production. As long as we cannot see how our exact inputs feed into the eventual output, we find a lack of completeness in our work. Worst, because we are not a real assembly line, there’s less clear demarcation of when the work leaves our hands. So most ‘work’ just drifts off after we touch it a little. Craftsmanship is lost, and so is the pride along with it.
So I was really grateful for this article on grace-paced living. Frankly, I haven’t really been appropriating the grace that is extended to us from God – especially not so for the workplace. And perhaps I should really start.
‘Developmental goals’ in business has become a bit of a bad word; and it seem to imply that projects are not optimised to make commercial sense but more to ensure that people have better lives. There is this implicit zero-sum game mentality here that thinks that wealth is accumulated through diversion rather than creation. Yet the very business of development is about creation of wealth. From the economic point of view, value is unlocked through collaboration, realising of ideas, some bits of moving of factors around as well as making good use of knowledge that is already embedded within the system. Having longer time horizon and building up long-term trust (social capital) can help communities unlock the value.
I’ve seen a young farmer in Ghana going from a hired labour to owning a farm 5 times the size of his original employer. And this young farmer was investing into irrigation pumps and other productivity-improving equipment, that original employer farmer was just complaining about how the government has not done enough to improve the lives of people. Being able to take control of one’s fate and making the sacrifices for it is important; successive generations of being able to maintain that attitude helps accumulate wealth especially during times of macro-growth. Development usually takes place this way and deployment of first-world capital into third-world normally involves getting your hands dirty and being extremely operational but once you get started and figure out a model that works, you are way ahead of a lot others.
That is in part what happened to the many companies that first invested in Singapore; their investment often paid off many fold. The story of Singapore’s development, for most part was wealth creation and it has been done through agglomeration of those with knowledge and then putting our factors (geographical locations, people, proximal resources) into use through the know-how of global companies. Of course, over the years, as other locations have become more attractive in terms of cost competitiveness, quality of manpower and all, we have to re-strategize our development. But the basics have been cover already by now. For now, I believe Singapore is at the stage where we need to now think about how the fruits of development are distributed and should be distributed.
As I stepped into the working world, I became fascinated by micro-cultures within workplaces, organisations and groups of people working together within a department or division. This micro-cultures had a huge impact on the productivity of teams, the behaviours of its members, the output, the way results are articulated and above all, the well being of the members. Then I came across this old article from Havard Business Review.
Growth Mindset
I never quite knew about Carol Dweck or her book but I do recognize the term Growth Mindset and this is perhaps something I was directly or indirectly exposed to some point through my teenage when I was growing up. This idea was appealing to me then because I was never taught to think too highly of myself. I’m often kept in check by my parents who reminded me that my sister was more intelligent than me even when I did better in school and so on. I was praised, however, for my hard work and the desire to learn and improve myself. That constant feedback on my effort and the small wins that I secure encouraged me and allowed me to go farther in stretching myself.
I was surprised that the writer used Jack Welch as an example of a leader who fosters growth mindset in the organisation and encourages employees to grow. Because I imagined General Electric to be the sort of survival of the fittest organisation where the top quintile was richly rewarded and the bottom quintile was fired and replaced. That bell curve GE approach to performance appraisal stuck in my head because like probably many other workers of big bureaucratic organisations, that was pretty much the approach towards talent management. And to me, that is what a fixed mindset, ‘star’ organisation was like – they name and crown winners and allow them to keep on winning. When one stays in such organisation for too long, one takes on the fixed mindset and that necessarily affects his productivity, and willingness to work hard.
For instance, employees at companies with a fixed mindset often said that just a small handful of “star” workers were highly valued. The employees who reported this were less committed than employees at growth-mindset companies and didn’t think the company had their back. They worried about failing and so pursued fewer innovative projects. They regularly kept secrets, cut corners, and cheated to try to get ahead.
The Right Combination
Keeping secrets, cheating to get ahead, cutting corners all sound pretty nasty and value-destroying. And of course, the employees themselves are as culpable as the culture they reside in but isn’t it amazing that we continue to perpetuate micro-cultures in organisation that do this. Yet why was Jack Welch heralded for the growth mindset? It was the other practices he brought in to encourage growth and give opportunities for mobility within this whole bell curve exercise.
He hired according to “runway,” not pedigree, preferring Big 10 graduates and military veterans to Ivy Leaguers, and spent thousands of hours grooming and coaching employees on his executive team—activities that demonstrate a recognition of people’s capacity for growth.
In that sense, the bell curve appraisal approach must be combined with proper hiring practices in place that would actually encourage overall organisation growth. By adopting just the tool to encourage competition amongst employees without encouraging the culture of sharing and passion for learning, the organisation exacerbates the ills of a fixed-mindset organisation.
Growth-mindset organizations are likely to hire from within their ranks, while fixed-mindset organizations reflexively look for outsiders. And whereas fixed-mindset organizations typically emphasize applicants’ credentials and past accomplishments, growth-mindset firms value potential, capacity, and a passion for learning.
Singapore organisations suffer this way disproportionately; being a society transfixed with past credentials, accomplishments, rather than potential and capacity, we are allowing our genuine potential suffer when we don’t pay attention to our micro-cultures or hold our CEOs accountable for these aspects of organisation performance. To make matters worse, culture is a long-term matter while organisations are typically organised to deliver results year on year. CEOs with short (planned or unplanned) tenure aiming for quick results pays little attention to creating a good culture or designing a growth-oriented organisation.
Your Role
As a director interviewing CEOs, ask them questions about people and their perspective on manpower. Whether they are theory X or theory Y is an important hint to the kind of cultures they will foster. As middle management, focus on caring for your people and creating the friendly, growth-oriented micro-culture within your sphere of influence in order to provide a divisional best-practice that the entire organisation can imitate or learn from. As an employee, provide formal and informal feedback relentlessly about culture, about the signal that management sends to employees through their actions, policies, and practices. Don’t allow management to dominate feedback conversations (they have sufficient opportunities at appraisals already).
Finally, as a CEO, ask yourself if you care more about your paycheck or leaving a genuine legacy in where you’ll be. Do you have that stillness of mind and firmness of principle when you take on the role and promise to deliver? As visible as the evidence of hard output and results may be a reflection of the CEO’s competence, they are short-lived compared to the lasting legacy and wonderful memories of a leader who cared and changed their lives and mindsets.
Came across Ken Robinson’s TED talk. And then read about some of his critics stand. Then also about his counterpoints. He’s a witty guy and hopefully would be able to help coordinate and rally people to steer mass education away from our woeful state now.
Singapore desperately needs this sort of rethinking. But that also shows how much we have influenced the rest of the world to admire something we have which turned out to be just merely playing well in the wrong game after all.
One pondering over education and skills equipping.
What is the difference between education and training? Why is it that Einstein says that he never let schooling interfere with his education?
One of the greatest lie we tell a child here in Singapore is: “Study hard and you’ll have a bright future.” I hear it everywhere; parents telling their children, older folks telling youths, and even students telling teachers that to explain some of the sheer hours they are putting into studying. This relationship between studying hard and bright future is poorly established. And to put things a little more rigorously, there are too many countervailing factors even if this was true under a set of conditions (which must also require ceteris paribus).
Academic speak aside, there is the element of competition that we must deal with. We have been creating competition where there isn’t a need to. Competition in life is real but instead of teaching our kids how to conform and play the same game, we should be encouraging them to carve a niche for themselves. In forcing everyone into the academic game, focusing resources on these people, we are implicitly coordinating the entire society into just a single pocket of niche which makes us incredibly vulnerable. We often claim that we don’t have land nor any natural resources – our primary resource is our human capital. Yet by forcing our domestic human resources through a narrow funnel we have created increasingly fragile economic growth that critically depends on a constant inflow of foreign labour (to take care of all the other areas of life and economy that we have neglected to cultivate and groom people for).
Next we need to deal with the connection between our ‘training system’ (note: I don’t consider the bulk of our schooling years education – in the same spirit as Einstein), and the kind of talents needed in the world is severely disconnected despite good intentions. There is overemphasis of quantifiable, hard skills and lack of attention paid to other equally important soft skills, as well as character-building (which is really what education is about) that will help to build our next generation up to deal with challenges in life and adversity at work. In other words, training must be better aligned – schools have come up with their own standards and nice-sounding principles without really consulting the other stakeholders. When was the last time schools ask parents and the industry how they can partner these other stakeholders to develop better programmes to build up students?
Lest you think that I am putting too much hope in our schools, we still have to deal with the whole question of ‘education’. All the talk about character-building a decade ago is gone – focus went back to all the quantifiable stuff. The more centralised decision-making becomes, the more demand it puts on quantifiable elements, the more resources allocated to fact-finding, data-gathering and the more buffer we build between layers of hierarchy in reporting – the less contemplation takes place. We discovered long ago that centralised resource allocation is problematic but we also have to contend with the problem that governments who inevitably grow large over time. A mechanism to break it back down is necessary. I think education holds promise for something like that. The more we decentralise activity down to the individual schools, put less roadblocks, make principals and teachers more accountable directly to parents and industry rather than the ministry, we will be able to start growing a new kind of workforce to fill the needs of our economy.
While it might be attractive to think that the ‘government’ could coordinate lots of stuff and make magic happen, the truth is the needs of the people are simply distributed, and relies too much on micro, local knowledge for a centralised bureaucracy to handle. The amount of reporting, verification, and layers to clear before initiatives are implemented squanders a lot more resources than necessary. At the same time, matters are complicated by the need to constantly justify being ‘big’ through securing public support with big goals, big initiatives. Historically, we have made big gains by agglomeration, growing huge and becoming big. But the gains we accrue from such centralisation and consolidation is bound to erode at some point. At the same time, coordination becomes much more difficult and incentives becomes increasingly skewed as those decision-makers are well insulated from the ground and what really happens.
I have been blessed by great teachers and parents who have helped to inculcate a growth mindset. One that I didn’t know I have until I started meeting people and getting to know several friends deeply. And more drastically, I realised that some of my cousins or even sibling do not always share that same sort of mindset. That this can be so radically different, I didn’t think much of until I chanced upon Bill’s article on Inc.
‘Developmental goals’ in business has become a bit of a bad word; and it seem to imply that projects are not optimised to make commercial sense but more to ensure that people have better lives. There is this implicit zero-sum game mentality here that thinks that wealth is accumulated through diversion rather than creation. Yet the very business of development is about creation of wealth. From the economic point of view, value is unlocked through collaboration, realising of ideas, some bits of moving of factors around as well as making good use of knowledge that is already embedded within the system. Having longer time horizon and building up long-term trust (social capital) can help communities unlock the value.
