Some Takeaways From My Time At The D.School

I’m back from Stanford’s d.school and have a few ideas I jotted in my notebook while I was there:

  1. Learn to celebrate failure; watch how you react to it
  2. Let go of your desire to control outcomes; with humans involved, nothing ever goes according to plan
  3. Try things, practice, iterate
  4. Don’t build expense into prototyping; the more it costs, the harder it is to iterate and change and the less you can learn from your failures
  5. Don’t make insight generation complicated
  6. Where is the burning platform? Look for that place and work on the problems involved
  7. Innovation is the outcome of a process, and innovators are the people who do it
  8. The design thinking process: empathize, define, ideate, prototype, test and back again
  9. The answers are not in this building
  10. When empathizing, spend 15% of your time engaging, noticing and following-up and 85% of your time seeking stories
  11. The purpose of your empathy research is to capture emotion; what is it? where does it come from?
  12. Gravitate in your empathizing and your design thinking process between flaring and focusing
  13. When defining, start with an observation, make an inference, then form a hunch that can carry you to insight
  14. Solve one problem at a time
  15. POV essentials: preserve emotion and the individual, use strong language, sensical wording, non-obvious leaps and generate possibilities that lead to problems the team wants to help solve
  16. 5 users are sufficient to capture 85% of usability cases
  17. Tail-end users have explicit needs and better represent the implicit needs of median users
  18. The future is already here, but it’s not evenly distributed
  19. Trusting relationships are the foundation of generative work
  20. Learn how things fail before it matters, not when it does
  21. You can only learn by doing, not by planning
  22. Match prototyping resolution to idea certainty to allow yourself to hear the inevitable critical feedback
  23. Testing = empathy; your prototype is your empathy probe
  24. The value is in the user and their emotions, not in the prototype or experience model itself
  25. The goal is to develop empathy with the user, not the make the prototype perfect; seek understanding
  26. All action aims at advancing the frame and the concept towards convergence
  27. What do your users say about the concept? The users’ reactions and excitement indicate proximity to convergence and likely next steps
  28. 3 elements of storytelling: action, emotion and detail
  29. 100% of people who succeed, start
  30. Struggle and learning are complements; there is no learning without struggle, and the more one struggles, the more one has opportunity to learn; you can not master new knowledge from a place of comfort

Some or even many of these are probably difficult to make sense of or place without further context about the design thinking process.

A Theory of Corporate Governance

“Good managements produce a good average market price, and bad managements produce bad market prices.”

~Benjamin Graham, the Dean of Wall Street, “The Intelligent Investor”

Introduction

In the world of value investing, which fundamentally concerns itself with securities trading at a large discount to indicated or intrinsic value (the Margin of Safety), one thing investors are always on the look out for is the value trap. A value trap is a company that looks really cheap but turns out to be cheap for a reason, ie, it’s actually fairly valued at its present price. Companies in general become mispriced for a variety of reasons, and while value traps are no different in this regard, one reason stands far above others in generating its unfair share of value traps– bad management.

This essay will explore in greater detail the genesis of bad management value traps via the principle that “corporate value is a function of owner agency.” Companies with bad management tend to demonstrate the least owner agency, sometimes approaching an effective zero. As of the present, the principle of owner agency can be explored across separate 8 sub-domains pertaining to the company’s corporate governance standards.

The 8 Sub-domains of Corporate Governance

Whether a company realizes it or not, it can and must make a decision about its corporate governance policy in at least 8 different areas which affect owner agency and thus corporate value:

  • The Board of Directors
  • Company purpose
  • Communication standards
  • Capitalization/capital structure
  • Reporting
  • Fairness
  • Competence
  • Barriers

Each of these sub-domains and the choices involved will be explored below. At the end, we will summarize the “official positions” with regards to what good corporate governance looks like in light of the theory promulgated in this essay.

The Board of Directors

In a company with a diversified ownership structure, the Board of Directors exists to represent shareholders and direct the behavior of management according to their wishes. In other words, the BoD is the primary tool of agency for shareholders of the company who, without official titles or positions of management themselves, have no direct way to influence the conduct of the company, its strategy or policies as owning individuals. The BoD is similar to a “house of representatives” in an elected republic– the representatives exist to serve not their own interests, or the government’s interests, but the interests of the individual voters who put them into power.

The BoD should have broad authority to put in place an overall competitive strategy for the company (what do we make or sell? how do we do it? who do we compete with?) and to hire and fire key, C-level managers (CEO, CFO, COO, corporate comptroller or treasurer). These managers should be fully “answerable” to the BoD and thus, the shareholders, whose property they are responsible for utilizing and safeguarding in the course of business.

In modern public companies, it is common for these top managers to be represented on the board, for example, the CEO is also often the chairman of the BoD and presides over its affairs. This is an enormous conflict of interest, because the CEO can not hold himself accountable as a member of the board, and the purpose of the board is to be influenced by the shareholders, not the hired management. This is especially problematic when the CEO is not a substantial shareholder himself.

Another common state of affairs in public companies is that the BoD does not represent significant shareholders. Individuals legally important stakes (5%+) or significant economic stakes (10-25%) often do not get offered representation on the boards of the companies they own and sometimes nominally control due to the distribution of share ownership in a company. If the Board of Directors doesn’t include individuals who represent the interests of shareholders, it serves no purpose other than to rubber-stamp the initiatives of the management, which means it serves no purpose at all besides the propaganda value of pretending the company has functioning corporate governance through the existence of a Board of Directors.

Company purpose

Why do companies exist?

Historically, companies were formed for the benefit of their owners in order to turn a profit. Some of the first joint stock companies were engaged in material manufacture or entrepreneurial discovery of new lands and trading routes. Long pre-dating formal joint stock companies of Europe in the early 1500s were numerous merchant combines across cultures and the ages which were formed to pool risk in long-distance hauling of cargoes. Because the owners were the only people who put capital into the company, it was the owners who were the only people expecting to derive a direct benefit from the operation of the company in so far as it generated profits– the agents of the company might earn salary and bonus according to the terms of their employment contract, and of course the prevalent State often wished to interest itself via tax, but otherwise the issue was pretty cut and dry.

The modern era has brought with it many innovations in the area of an answer to that question, but none of them seem to be any good. Today we hear talk of “stakeholders”, where a stakeholder seems to be any economic or political interest, such as customers, communities, employees, vendors, foreign nationals, labor unions, governments, etc. who isn’t an actual equity owner in the company. We hear of “corporate social responsibility” (CSR) which is just another way to plead the case of certain “stakeholders” with regards to the deployment of a company’s capital. In vogue since the late 1980s and still popular today is the idea that long-serving management of the company should be the real beneficiaries of the existence of the company and that they should accumulate a lion’s share of the value the company creates because of the key role they play in making the company capital fecund in the first place.

Yes, it seems today that companies exist to serve everyone but those who own them.

Regardless of the answer to this question, it is important to simply have an answer. It becomes a standard of value that a company’s management and employees can be held to in observing their choices and behavior. It can serve to answer the simple question, “Are they doing a good job?” from which many other questions and decisions might emanate.

Without a stated purpose, it is not only impossible to agree to where everyone is going but it is impossible to govern the corporation so that it gets there. Certain purposes exclude certain ends and certain methods while allowing certain others.

Communication standards

With regards to how the company and the Board of Directors communicates with shareholders, there are also certain standards that can be implemented to guide action.

A common policy seemingly in place at many companies is clubsmanship and secrecy– executive management is unwilling to provide basic answers to shareholder questions and requests for information, often going so far as to put up unnecessary obstacles to proving they are in fact a shareholder in the first place. And the Board of Directors, captured by the management, facilitate this by refusing to assist the shareholders in their requests, to bring pressure upon management to provide the information (legally) requested and often times they will even make themselves unavailable or unresponsive to shareholders entirely.

The opposite pole would look like this: the management of the company assumes a goodwill posture and provides answers to any (legal) information request made. If the company is of sufficient size and scale and it is fielding a lot of such requests, it may make a special individual (such as an IR agent) available to help source answers. It might also look for a scalable solution, by putting commonly requested corporate documents (financial statements, records of ownership, minutes from board meetings, etc.) into the public domain via its website, and to also offer an FAQ session for answers to repeated inquiries.

As such information is legally due to shareholders anyway and can’t really harm the company by being shared, it makes sense to offer it to anyone who asks, shareholder, potential shareholder or simply a curious stranger. It is not a redacted espionage memo and it doesn’t require any special classification system or hierarchy of security clearances to access.

The Board can facilitate this process as well by being in regular contact with larger shareholders to understand their needs and concerns for the company they own, and to communicate these thoughts to management in board meetings and report back their findings to shareholders in the process.

Capitalization/capital structure

Public companies are in a unique position in terms of their ability to raise capital and finance their projects. Because of their public nature, it is a relatively simple affair to do a rights offering and issue new shares, debt or other securities. Even more important, if ever the market treats the company unfairly, they have the opportunity to buy back their shares from concerned shareholders at a discount to intrinsic value. The company is always in a better position when it is owned by people who believe in the vision and direction of the company, which can be achieved by buying back shares from those “distressed” sellers who have lost confidence.

One role of the BoD and corporate governance is to determine what the best capital structure is at any given time in a company’s life given its future plans and strategies. This means making high level decisions about the debt to equity ratio, if applicable, and also about the issuance or buyback of shares more generally.

Another thing the BoD can facilitate as an act of corporate governance is being efficient with the company’s capital– dividending it out when the company has more capital than projects, and issuing rights to bring capital back in when it has more profitable projects than it has capital to deploy on them.

This is not a one-time decision. It is something a company should be examining on a periodic basis– either quarterly, annually, or any time a major change in its market price or project pipeline occurs. Companies that hoard capital they don’t need do their investors a disservice because they forgo the economic returns available on the surplus capital, which could be deployed at higher rates of return in other enterprises. And companies that refuse to expand the share base in response to important project opportunities make a similar mistake but inverse.

Reporting

Markets move on information. Without information about a company, investors are left with nothing to make a decision off of and so they can not act rationally. They become forced to gamble and speculate. For a company that is not in a hyped industry, the gamble is often made in fear– shareholders sell out at any price to avoid association with a “black box.” It is a critical aspect of corporate governance to have a consistent reporting policy in place to update shareholders on the performance of the company’s strategy over time and to explain key financial data to them.

This kind of reporting requires: transparency, honesty and articulate capabilities. The chairman, being the head of the Board of Directors which represents the shareholders, is the most likely individual to communicate with shareholders about the state of their company. He might append letters from the CEO and other key executives as well if he so desires, but each of these individuals has an incentive to patronize their reader and focus on what went well. The chairman, having no duty to anyone but the shareholders and reality, is in a better position to see the whole hog and not just the lipstick on the pig.

For reporting to be meaningful, it must take into consideration the entire strategy and how the operations worked to achieve it or fail it. Glossy PR brochures highlighting the charity and good works of the management or employees, of the high level successes that did not translate to the bottom line, or to a stylized, marketing view of the company and its operations that does not drive to the key objectives and how they were met or missed, do not do shareholders any good.

While it’s true that the annual report is a key “marketing” piece in attracting knowledgeable shareholders, its primary purpose is to inform, not to sell. It must focus on the good, the bad and the ugly, not the positive or the bright side.

Fairness

Tied up in the ideas of representation and company purpose is the idea of fairness– are all shareholders treated equally? And are all managers and employees treated the same with regards to their duties to the shareholders?

There are two separate but related concepts of fairness at stake. One is the fairness of decisions between majority and minority shareholders, aka, “taking minority capital hostage.” The other is the fairness of decisions between shareholders and agents of the company, aka, “being subservient to loyalty or tradition.”

It is a sadly common sin amongst many public companies with decisive majority owners, especially owners who are insiders and part of management, that they find ways to employ the company’s capital or govern the company which benefit them at the expense of the passive, minority shareholders. An example of this would be a majority shareholder who is also a manager, who is earning an outsize salary and delivering a subpar return on equity compared to the industry or market, who refuses to “fire” themselves as a manager or scale back their pay. The minority shareholders are in effect subsidizing this poor performance with their capital, which is trapped in the company controlled by the majority shareholder.

This is not “fair” because it doesn’t treat the minority and majority shareholders as economic equals– the majority shareholder enjoys a special benefit or subsidy that the minority shareholder pays for. If the company did not exist, and this arrangement was being proposed as a condition of forming the company, no rational minority shareholder would agree to it. If they wouldn’t agree to it de novo, they can’t be thought of as agreeing to it as part of a going concern. This would be similar in a political system where some citizens are treated as “second class” by the law and discriminated against to the advantage of the privileged class.

The other sin amongst public companies is holding on to operating units or employees or managers who are underperforming in their jobs by some agreed upon, objective standards. These units are typically retained out of a sense of tradition (“We’re an X company, we’ll always be an X company”) or personal loyalty (“Y has been with the company for so many years, we can’t put them out on the street now”). Clearly, these kinds of decisions could easily conflict with a stated purpose such as “To maximize profits to shareholders.” They again represent subsidy. And the fact is that no company has infinite resources or can afford to engage in charity without limit; and if it can’t afford without limit, it can’t afford WITH limits, as the economic consequences are the same– the company is wasting capital on ineffective means.

Adhering to loyalty or tradition at the expense of shareholders means turning the business into a charity. Charity is a private virtue and a public vice and it has no place in a public company in this sense.

Competence

Modern companies are complex organizations with extensive economic resources at their command. The average public company, regardless of market price, has millions to tens of millions of dollars of shareholder capital involved in ongoing operations. There is too much to keep track of, and too much at stake, for a company to allow incompetent people to manage this level of responsibility.

Corporate governance serves another function here in setting standards of value for managers and employees in terms of the competence required in their positions of relative responsibility. Importantly, the Board of Directors can set standards in specific areas, such as financial or economic concepts which have an important bearing on the company’s risk position or the stability and profitability of its operations over time. Internal capital allocation, that is, the determination of how to deploy the company’s capital (buybacks, dividends, the raising of finance, or the investing of capital into operations or liquidating of capital so employed), is a seemingly simple discipline which nonetheless has a magnified impact on the company’s operations and its wealth as a whole– it requires a specific level of competence in the basic concepts and dilemmas involved for a person to add value. Many companies are run by people who do not understand capital allocation, have never studied the issues involved and often aren’t even aware of the momentous decisions they are making with regards to it, instead letting personal prejudice or momentary whim be the arbiter of decisions costing millions of dollars with long-lasting consequences for the company into the uncertain and unknowable future.

The Board of Directors can strongly influence the competence of the company and its management by researching and instituting relevant standards of competence needed in key decision-making areas and working to educate and provide resources to the company’s agents employed in these areas.

Barriers

In economic and business literature the concept of “competitive advantage” often revolves around a related concept of “moats”. A moat is a barrier to entry in a competitive market that preserves the value of incumbent firms by allowing them to spend resources on deploying their business model rather than spending those resources on defending it from competitors looking to do the same.

In the world of corporate governance, a similar phenomenon exists: “shareholder defense” tactics aimed at preventing “takeovers.” However, there is a subtle difference in the nature and virtue of each.

In the business competition sense, moats which provide competitive advantage usually exist as a structural part of the industry– they are embedded in the nature of the economic activity itself or the incentives competitors would face that are innate to margin structure, human behavior, etc. They usually can not be constructed or developed purposefully. Not so with takeover defenses. These are things that a company can or can not choose to employ and which the law often gives power to, implicitly or explicitly.

Competitive advantages protect companies from other companies. But shareholder defense mechanisms do not protect shareholders from other investors– they protect managers from their shareholders!

The actual effect of takeover defense mechanisms, when employed, is to drive a wedge between the people who own the company (the shareholders) and the people who control it (the management) by limiting the authority and control the shareholders have over dismissing or countermanding the management’s decisions.

Staggered boards, for example, help to ensure that change at the board level happens slowly (if at all), rather than as quickly as shareholder ownership changes. If there are 5 board seats and all are held by “insiders” and only 2 come up for bid every few years, then it may be 6 or more years, for example, for a shareholder who manages to obtain a majority of shares of the company to see his majority influence reflected in the composition of the board. That means a long period of time where existing management can work against the shareholder or at cross-purposes.

Poison pills, another common strategy, work to similar effect. A poison pill provision essentially neuters the voting power of a shareholder who manages to accumulate a substantial fraction of the company’s outstanding shares. If the provision says that any shares owned over 10% will vote at 10%, it prevents any specific shareholder from obtaining voting control, which protects the management from being told to change their tune or from being thrown out entirely.

It seems counter-intuitive, but removing barriers to entry for ownership of the firm is an important piece of corporate governance policy to work out. And much like the popular theory of democratic politics or republicanism, reserving the “right to vote” or the legitimate authority of the voters over their political appointees results in a situation where the appointees behave irresponsibly and often build up power and prestige at the expense of the people they were hired to represent.

“Official Positions” of Good Corporate Governance
Outlined below is an attempt at an “official” good corporate governance doctrine that any concerned company, its Board and shareholders could adopt to improve the corporate governance situation at the company. In so doing, it is believed that the company will attract quality, long-term oriented shareholders willing to pay a fair price for a properly managed and profitable enterprise. The items elaborated on below serve to maximize owner agency and with corporate value being a function of that agency, they should also serve the maximize the value of the company.
  • The board of directors should represent — meaning, be constituted of — significant shareholders and/or their agents
  • The company should be run for the purpose of maximizing the present value of expected cash flows to shareholders
  • There should be a constant dialog at the board level which includes larger shareholders about the best way to achieve the stated purpose
  • When the opportunity for capital/equity is low, money should flow out of the company; share buybacks and dividends are the way for money to flow out; when the opportunity is high, capital should flow back in; a rights offering (with transferable rights) is the cheapest and fairest way for money to flow back in
  • The annual report should have an essay or letter by the chairman (who is ultimately responsible for achieving the stated purpose) reiterating the objective, discussing the level of achievement in the prior year and outlining the strategy that has been agreed upon to pursue it going forward
  • It is unfair for a majority or manager to retain employees or operations for sentimental reasons unless they satisfy the purpose of maximizing the present value of expected cash flows to shareholders
  • Anyone responsible for achieving the objective should have the necessary grounding in finance and economics to understand how to carry the work out (study an agreed upon bibliography)
  • Management/corporate “shareholder defense”/takeover defense mechanisms such as staggered boards, poison pills, limits on shareholder meetings and proposals, secrecy/lack of disclosure, etc., destroy shareholder value by driving a wedge between ownership and control

Intro to Design Thinking

I have the privilege of attending the Stanford d.school’s Design Thinking Bootcamp, an opportunity I was turned on to by a friend in the venture capital community. In preparation for the program, attendees were asked to conduct an “Ideation” session at their place of work with other managers and decision-makers in their organization. This is an opportunity to not only get an introduction to the attitudes and tools used in design thinking, but also to begin practicing with these ideas immediately within one’s business as part of the design thinking meta is “a bias toward action.”

Here are some takeaways about thinking creatively and generating ideas in a collaborative environment that I’ve gained so far:

  • Adopt a “Yes, and…” Attitude
  • First generate, then evaluate
  • Don’t just find one idea
  • Think in terms of a specific problem
  • Focus on emotions
  • Use constraints to increase idea volume
  • Use analogous thinking to go some place else
  • Use “QBD” to evaluate ideas
  • Think about the “headline”, not the “article”
  • If it doesn’t get written down, it didn’t happen

More details on each of these ideas, and impressions from my actual ideation sessions, follow:

Adopt a “Yes, and…” Attitude

When people come together to create ideas, they have a habit of seeking to find what is wrong with their collaborators thinking, rather than what is right. The goal in design thinking is to first come up with a lot of ideas, not to find the “right” idea as quickly as possible. A helpful attitude to adopt is “Yes, and…” which means, whenever your collaborators come up with an idea, reply “Yes, and…” and then build off of their idea, either with an additional flourish or iteration, or with another idea you have in mind that their idea has led you to think. Don’t try to make yourself look smart, try to make your partners look brilliant.

First generate, then evaluate

Another intuitive habit most people bring with them to creative sessions is to try to evaluate ideas as fast as they’re generated. No sooner does someone have a new idea than does that person, or a collaborator, try to figure out if the idea “fits” with the constraints of the project. Many ideas that are either excellent on their own, or could lead to an excellent and realizable idea, are tossed out in the instant evaluation before they’ve had a chance to make an impact. Get in the habit of separating the generation of ideas and the thinking through the merits of the ideas generated. Never confuse the two or allow the processes to mingle in your thoughts or practice.

Don’t just find one idea

When you’ve got a problem, you only need ONE solution. And ultimately, you can only implement one solution– time, resources, etc. are scarce. So it’s easy to think the goal is to “just come up with one idea.” But trying to find the right idea means evaluating as you generate, and it also means pre-qualifying your own thinking before you even generate ideas. Your goal in ideation is actually to generate as many ideas as you can, regardless of whether they make sense, actually solve your problem, are feasible, etc. Go for quantity, not quality, when generating ideas.

Think in terms of a specific problem

It helps to come up with ideas when your problem is specific enough to be solved by an idea you come up with. This means thinking in terms of a specific group of people and in terms of a specific change you want to bring about, either an action or a state of mind. A prompt that can help is to frame your problem with this ad lib– “What can we create for… [specific group of people] that makes them/that helps them [choose one] … [a physical action you want them to take, or a state of mind you want them to adopt]?” An example would be, “What can we create for 10 to 12 year old kids that makes them excited to eat vegetables?” The problem is specific– it is about 10 to 12 year old kids, a group of people with distinct qualities. And what the solution provides is also specific– it will generate a feeling of excitement in them in relation to their eating vegetables.

Focus on emotions

You’ve got your problem. It’s important to think of the mental state of the “user” you’re solving for. Almost inevitably, finding a solution will involve focusing on the change in the mental state that is necessary to motivate action. Sometimes, the change in the mental state by itself is the goal, for example, “What can we create for customers who are angry with us that will make them love us and tell all their friends?” Translating the problem during the ideation process into an emotional state creates a valuable constraint (discussed below) for increasing idea volume.

Use constraints to increase idea volume

It is counterintuitive, but putting constraints on your idea process actually allows you to be even more creative because it focuses the mind in specific ways. Some constraints used as examples in the ideation workshop were “Every idea must cost $1 million” or “Every idea must get you in trouble with your boss”. Imagine you actually have a budget constraint– you only have $50,000 to spend on a solution. Coming with the REAL budget as a constraint is likely to limit your thinking because you’ll immediately begin pre-qualifying and evaluating ideas as you try to generate them.

But if you invert the real constraint into an imaginary one where you must SPEND a large sum of money on your idea as a minimum, you will end up with a sense of much more freedom. Later, you can take those high dollar ideas and figure out how to reduce the cost to something that is actually affordable. The inversion process allows you to hurdle over your real constraint which would limit your creativity and therefore your ability to find a real solution.

You could think of arbitrary constraints, simply to inspire creative and offbeat thinking, or you could try inverting real constraints to trick yourself into thinking past them. The d.school profs use the metaphor of the thumb over the garden hose, which forces high pressure jets of water to spray over a larger area versus just using the innate pressure of the hose which tends to dribble out.

Use analogous thinking to go some place else

Another tool for successful ideation is to create analogous situations and imagine how those people or institutions would handle the creation of a solution for your problem. To find analogies, you translate your problem into the emotional state, mentioned earlier. Sometimes it’s easy and obvious, because you already have an emotional change as a condition of your solution. But if you don’t, this can take some creativity in and of itself to figure out what the emotion is you’re searching for. As an example, if your problem was “What can we create for our hiring department that helps them to only hire people who exceed our standards?” the emotional state might be “confidence.”

Once you have your emotional state, you must ask yourself, “What kind of person, group or place is superb at generating this kind of emotion?” Once you have a list of such entities that excel at generating this emotion, you can do an iterative process of asking yourself, “What would X create for… that helps them/that makes them…?”

Now you are in someone else’s shoes, thinking about the world the way they do and you have unlocked an entirely different form of creativity from your own.

Use “QBD” to evaluate ideas

Okay, you’ve got a ton of ideas at this point. Now it’s (finally) time to evaluate them. But you’re not just going to start deciding which are possible and which are insane. Instead, you’re going to use more creativity to evaluate your ideas. You’re going to think about which ideas are Quick, Breakthrough or Delightful.

Quick ideas may not be full or perfect solutions, but they could be reasonably implemented right away and this incremental progress would have an immediate impact– things would get better as far as your problem is concerned. This is an important way of thinking about selecting solutions because often no solution is found in search of a holistic or perfect one, which either doesn’t exist or can’t be accessed in a linear way of thinking. By selecting a Quick solution, you can take steps toward what might be a final, perfect solution and get a win in the meantime.

Breakthrough ideas might not work, but if they did, they’d be a game changer. They’d be an all new way of solving the problem, or they’d give the group who employs them a distinct competitive advantage, or greatly leverage their efforts. Breakthrough ideas help us think about how to shift paradigms and find solutions that don’t just work, but work insanely well.

Delightful ideas are just that– if we implement them, people feel GREAT. And feeling great is an important part of solving problems and making progress in our work or business. When we find Delightful ideas, we find ways to inspire, motivate and energize people that can lead to other creativity or effectiveness that we can’t imagine or anticipate in simply solving the problem.

Think about the “headline”, not the “article”

When generating and sharing ideas, it’s important to think and communicate in terms of the big impact, high level concept of the idea and not get bogged down in the nitty gritty details– that way lies the habit of criticizing, condemning and evaluating before a good idea can take root, or inspire another. The instructors refer to this as thinking about the “headline” and not the “article.” An example would be, “Hire an expert interviewer” versus “Find a person with X years of experience interviewing people, pay them $Y per year, assign them duties of A, B and C, they will report to Z and will be measured in their performance by E, F and G.” You can find any number of things in the article version that might be unrealistic or impractical, if you can even come up with all the necessary details. It is putting the cart before the horse. You first have to come up with the big idea and see how it could lead to a Quick, Breakthrough or Delightful improvement for your problem, and then you can go about fleshing it out and figuring out how to make it practically work.

If it doesn’t get written down, it didn’t happen

This idea is a good practice for any meeting or information-sharing activity of any kind but it seems to be especially relevant to the process of ideation– if you aren’t writing ideas down as you’re coming up with them, they may as well not exist. By the end of a 1hr long ideation session, you might have come up with fifty or sixty different ideas and concepts as a team. Who can remember what those were by the end of it? So it is important to write them down as you go. The instructors recommend using sticky notes and slapping them on the wall as you go, which not only serves to keep things written down and makes it easy to move ideas around as you review and ideate, but the small amount of space necessarily forces one to think in “headline” terms.

Another thing that should be written down, repeatedly, is the prompt of the problem you are trying to solve (“What can we create for…?”) as well as the specific constraints, analogies, etc., that you are bringing to bear on them as you focus your ideation in different ways.

Our experience with ideation as a team

My ideation workshop involved 5 other people in our organization in addition to myself, all group managers or individuals with lead authority at the operating unit level. We split up into 2 teams of three to work through our ideation process.

One takeaway is that collaborative idea generation is FUN. We genuinely had a good time working together to come up with solutions to our organization’s problems. There was a lot of laughter, spirited talking and debate and enthusiasm. Often times a team would race ahead with a prompt or keep working after designated time was up because they were so caught up in their thinking and idea generation.

Another takeaway is that anyone can be creative. Most of the operating managers were selected because they tend to experiment and try new things in their operations, but what really makes them excellent in their roles is that they relentlessly stick to a proven system of processes and procedures. There may have been some fear that people who are really good enforcing a set of orders might not be able to come up with creative new ideas. This just wasn’t the case. They all had a ton of ideas and I think one thing that was clear by the end of the session was that everyone would’ve liked to have selected their individual problem they brought to the group for ideation work when we could only pick one at a time.

A third takeaway is that the trail one follows to arrive at workable solutions often starts in an unpredictable and highly abstract place. It highlighted for us the value of every idea generated, and the importance of separating generation from evaluation. Where you start is rarely where you will end and if you can embrace the idea of accepting all ideas as valuable and disregarding their merit or feasibility at the outset, you can let those ideas unlock all kinds of interesting solutions you otherwise may not have accessed.

Finally, we realized that even when we came up with an idea that we thought was Breakthrough or Delightful, but lacked obvious practical application, we could begin “trimming” and paring down the idea from there to find something we COULD do with it that still tapped into the essence or principle of the original idea. For example, one group came up with the idea of hiring a professional athlete to be a motivational coach to our organization’s managers. We don’t have the budget for that, nor is that athlete necessarily available for hire, but we can think about what kind of qualities we believe he would bring to such a role and look for a person we could hire that can bring those qualities, or the way we could change processes or definitions of roles within the organization to incorporate those values we now realize are essential to helping us solve a known problem. I think of this as “analogizing from the analogy”.

I can see how the ideation process, which we are just being introduced to through this practice work, can add value for all people at all levels of responsibility within our organization. It is inspiring and motivating, it creates the “bias towards action” in the person doing it and it yields real results which can actually make things better for us, our customers and our team. I am sold!

Review – The Intelligent Investor

The Intelligent Investor: A Book of Practical Counsel

by Benjamin Graham, published 2006

What follows are the notes from my third (lifetime) re-reading of Graham’s classic investment treatise. I had planned to re-read this book after a market sell-off, but I realized this was a futile act of meta-market timing self-delusion and decided since I was interested in it I should just re-read it now. I am glad I did!

Introduction

Developing knowledge about past market experience with stock and bond investments is key to intelligent investment; surveying the past with its ups and downs not only makes the future more predictable but helps to create a rational baseline for our own expectations about what is possible with our investment portfolios. Experience shows that enthusiasm almost always leads to disaster. Market conditions can reward, on a relative basis, a passive versus an active approach– sometimes the effort to reward ratio of active management is not worth the trouble.

The investor’s chief problem is likely to be himself. Mastering oneself is a necessary part of mastering one’s investment program.

The future is uncertain. Nonetheless, we must act on the assumption that sound principles will see us through a variety of conditions over time, just as they have in the past.

Chapter 1

In most periods of market experience there is a “speculative factor” in common stock prices due to the enthusiasm of the marketplace. We must keep it within limits and be prepared for short and long-term adverse results in terms of both financial and psychological experience whenever this speculative factor is present. Acknowledging this reality, it’s extremely important to keep speculative and investment positions in separate accounts and never to let them mingle financially or in our thoughts.

Better than average results require promising prospects (in terms of risk versus reward) and a lack of popular following of certain portfolio holdings when purchased.

Chapter 2

There is no close, time-causal relation between inflationary or deflationary conditions and stock earnings and prices (likely because of Cantillon effects). Earnings rates have shown no general tendency to advance with wholesale price increases. The best result to expect from one’s investment program over long periods of time is approximately an 8% per annum return from a combination of dividends and price increases.

It is the uncertainty of the future that makes the lack of diversification (between common equity and cash/fixed income in a portfolio) folly. At one extreme, one might allocate 25% to stocks and 75% to cash or fixed income, and at the other extreme the inverse. The “happy medium” is 50%/50% between the two. Never should one have 100% of one’s capital in stocks or cash/fixed income– the former suggests an irrational optimism about the future and a total disregard for the risk of adverse conditions, and the former suggests an overly pessimistic view that has given in to the unknowable temptation to time the markets.

Chapter 3

Rather than try to time the market, it is more important to follow a consistent and controlled common stock policy and to discourage the impulse to “beat the market” and to “pick the winners”. The work of a financial analyst falls somewhere in the middle of a mathematician and an orator, in that he must be exact where he can, and qualify where he can’t.

Chapter 4

The rate of return sought from one’s investment portfolio should be dependent upon the amount of intelligent effort one is willing (and able) to bring to bear on the task. Passive indexing requires the least intelligent effort and should bring the lowest return expectation; active value strategies entail the most intelligent effort and should have commensurately higher return expectations.

Long experience shows that the average investor should stay away from high yield (junk) bonds. Experience also teaches that the time to buy preferred shares is when prices are depressed by temporary adversity.

With every new wave of optimism or pessimism, we are ready to abandon history and time-tested principles, but we cling tenaciously and unquestioningly to our prejudices. This is a bias of human psychology which must be overcome if one is to have a successful long-term investment record.

Chapter 5

Common stocks have an added degree of security when the average dividend yield exceeds the yield over that which can be obtained from good bonds.

Rules for common stock portfolios for the defensive investor:

  1. Minimum of ten different issues
  2. Large, prominent and conservatively financed companies
  3. Long record of continuous dividend payments
  4. 25x past 7yr average earnings (4% earnings yield) and 20x LTM earnings, at a maximum

Experience shows that large, relatively unpopular companies offer a good hunting ground for the defensive investor to search in.

Chapter 6

Avoid inferior bonds and preferred stocks at prices greater than a 30% discount to pay value; never buy yield without safety. Owners of foreign debt issues have limited legal recourse, which increases their risk. IPOs can be good purchases… years after the fact, at small fractions of their true worth; let others make the quick profits and experience the harrowing losses of recently issued stocks.

Chapter 7

Danger lies in market/public price enthusiasm outstripping earnings growth. Confidence in your investments is a function of proximity and control.

There are 3 primary sources of selection for the enterprising investor’s portfolio:

  1. Large, out of favor companies due to temporary developments; large companies are safer than small companies because they’re more likely to weather the storm; always judge average past earnings, not LTM
  2. 50% discount to BV or greater, due to currently disappointing results or protracted neglect/lack of popularity
    1. require reasonable stability of earnings over past decade
    2. no earnings deficit in the company’s history
    3. sufficient size and strength to meet possible future setbacks
    4. NCAV bargains are safe and profitable method for finding bargains
  3. “Special situations”

The reasons why bargain issues lead to good performance:

  • dividend returns are relatively high
  • reinvested earnings, which are substantial relative to price paid (BV grows rapidly)
  • bull markets are more generous to low-priced issues
  • specific factors contributing to poor earnings may be resolved in the interim

One must choose to engage in either active (enterprising) or passive (defensive) investing, there is no room to do both without becoming speculative in one’s thoughts and actions, ie, can’t be “half a businessman”.

Bargain pricing territory begins at 66% of appraised value, as a return to 100% or fair value indicates a 50% potential upside at purchase price.

If you can control a company, you can safely pay closer to fair value for it.

The investor’s choice as between the defensive or the aggressive status is of major consequence to him and he should not allow himself to be confused or compromised in this basic decision.

Chapter 8

Investment formulas are ephemeral and their popularity is their undoing. Rather than market timing, commit to proportional exposure to stocks and cash/fixed income. Every investor who owns common stocks must expect to see them fluctuate in value over the years. Most holdings will advance as much as 50% above the lows, and fall 33% from highs, so set your expectations accordingly.

The virtue of the proportionality formula is that it gives the investor something to do; often it is the inability to sit still and the propensity to tinker that leads to risky novelty. Ironically, higher quality common stocks have more of a speculative element in their price which contributes to their volatility; it is their very popularity and perceived safety which invites unscrupulous risk-takers to dabble in the trading at the margin where the price is set.

Stocks bought closer to book value allow for greater detachment from price fluctuations. Try to be in a position to buy more, including what you already own, when prices fall, assuming value remains in tact. The stock market is often wrong, far wrong, creating opportunity for courageous and alert investors.

All business quality changes with time, sometimes for better and sometimes for worse. Everything is a trade given circumstances and time. Allowing unjustified price action in one’s holdings to influence one’s actions is to turn the basic advantage of liquidity into a disadvantage. True investors see price fluctuations one way: as opportunity to buy what is cheap and sell what is dear. Therefore, the litmus test for investment versus speculation is this, Do you try to anticipate and profit from market fluctuations, or do you look for suitable securities to acquire and hold at suitable prices?

Good managements produce good average market prices and bad managements produce bad market prices.

Chapter 10

Businessmen seek professional advice on various elements of their business, but they do not expect to be told how to make a profit; investors must be similarly responsible.

Chapter 11

The behavior of a security analyst includes:

  • examine past, present and future of a security
  • describe the business
  • summarize its operating results and financial position
  • explain the strengths and weaknesses of the business, its possibilities and risks
  • estimate future earnings power under various assumptions
  • compare companies, or the same company at different times in its history
  • provide an opinion as to the safety of the security

The more dependent valuation is on an assumption about the future, the more vulnerable that valuation is to miscalculation and error.

When evaluating corporate bond safety, judge it by the total interest charges as a multiple of past average earnings (7yrs) or against the “poorest year” of earnings.

No one really knows anything about the future. A company with a high valuation for good performance is already getting a premium for good management, don’t double count management value separately.

One test of quality is an uninterrupted record of dividends going back a number of years. Dividends can’t be forged.

The multiple on earnings is an implied growth rate, pay attention to this fact. There is no way to value a high growth company in which the analyst makes realistic assumptions of both the proper multiple for current earnings and the expected multiple for future earnings.

An analyst can be imaginative and play for big profits as a reward for his vision (entrepreneurship) or he can be conservative and refuse to pay more than a minor premium for possibilities as yet unproved; but do one or the other.

As an exercise, do a valuation based on past performance and another on expected future performance and compare the two. This can be beneficial because it:

  1. provides useful experience
  2. creates a record of the experience (allowing for self-evalution)
  3. may lead to improved methods of analysis in examining the record

Chapter 12

Don’t take a single year’s earnings seriously, it’s too easy to fudge the numbers with special charges and one-off items. Sometimes large losses in the past create tax advantages which boost earnings unfairly in the present, so remember to adjust earnings for the average tax impact. Using average earnings smooths out special charges and other one-time items which is another reason to use an average as it reduces the work of trying to “normalize” earnings over time.

Chapter 13

High valuations entail high risks.

Chapter 14

You should reject from your consideration companies which:

  • are too small
  • have a relatively weak financial condition
  • have a stigma of earnings deficit in their 10 year record
  • do not possess a long history of continuous dividends

There is an absence of safety when too large a portion of the price is dependent on ever-increasing future earnings. Stock portfolio earnings overall should be at least as high as the rate on high grade bonds.

Even defensive portfolios should be turned over occasionally, if a holding has seen excessive advance and this is a more reasonably priced issue available. It’s better to sell and pay the tax than not to sell and repent the foregone profits.

Do not be willing to accept prospects and promises of the future as compensation for the lack of sufficient value in hand. Leave the “best” stock alone, instead emphasize diversification more than individual selection. If one could select the best unerringly, one would only lose by diversification.

Chapter 15

There are extremely few companies which have been able to show a high rate of uninterrupted growth for long periods of time; conversely, remarkably few of the larger companies suffer ultimate extinction. Competitive advantage in investing lays in focusing one’s efforts on the part of the market systematically overlooked by everyone else.

When Graham owned net-nets, he owned about 100 at a time– “extreme” diversification.

The Graham-Newman playbook included:

  • self-liquidations and related hedges (performed well in bear markets)
  • working-capital bargains (NCAVs)
  • a few control operations

The right time to buy a cyclical enterprise is when:

  1. the current situation is unfavorable (macro)
  2. near-term prospects are poor
  3. the low price fully reflects the pessimism of the market

When browsing the stock guides for opportunity, look for the following characteristics:

  1. P/E of 9x or less
  2. financial condition
    1. current assets >= 1.5x current liabilities
    2. debt <= 1.1x net current assets
  3. earnings, no deficit in the last 5 yrs
  4. some history of dividends
  5. earnings growth, last years earnings > 5 yrs ago
  6. price < 1.2x BV

You can use ValueLine, stock screeners or Google Finance-linked GSheets to filter.

If you were to use a single criteria to pick stocks, two items have worked successfully in the past:

  1. important companies (S&P 500) trading at a low multiplier
  2. a diversified list of net-nets have performed “quite satisfactorily”

When the going is good and new issues are readily saleable, stock offerings of no quality at all make their appearance.

Special situations are the realm of the pro and require focus and dedication to yield results. Do not do them as one-offs.

Chapter 16

The addition of a conversion privilege on a security betrays the absence of investment quality.

Chapter 17

If a company pays no taxes for a long time, it throws into question the validity of reported earnings. Watch out also for “channel stuffing” of special charges into a single year on the income statement.

Chapter 19

When to raise questions with management:

  • unsatisfactory results
  • results which are poor compared to competitors
  • long discrepancy between price and value

As a rule, poor managers are changed not by activism, but by a change of control.

Dividends can be valuable to the owner of a poorly-run company because they allow some value to escape from the clutches of bad management.

There is no reason to believe expansion moves by a bad management will deliver anything other than more poor results.

Chapter 20

The function of the Margin of Safety is to render unnecessary an accurate estimate of the future. In stocks, the Margin of Safety lies in the expected earning power being considerably above the going bond rate. Chief losses come from low quality businesses bought in favorable times. Margin of Safety is totally dependent on the price paid; it is largest at one price, smaller at another and non-existent at a third.

The insurance underwriting process can be thought of as Margin of Safety applied to diversification of bets.

There is no Margin of Safety available in staking money on a market call.

There is no valid reason for optimism or pessimism of the continued function of quantitative methods of analysis.

The Margin of Safety is demonstrated by figures, persuasive reasoning and reference to actual experience.

Do not try to make “business profits” out of securities unless you know as much about their value as you’d need to know about the value of merchandise you proposed to manufacture and deal in. Do not enter into an operation unless a reliable calculation shows it has a fair chance of a reasonable profit. Stay away from situations where you have little to gain and much to lose. Have courage in your knowledge and experience; act on your judgment even when it differs from others. Courage is the supreme virtue when adequate knowledge and tested judgment are at hand.

To achieve satisfactory results is easier than most people realize; to achieve superior results is harder than it looks.

Postscript

One lucky break, or shrewd decision, may count more than a lifetime of journeyman efforts; but those efforts — preparation and disciplined capacity — are what expose you to the good fortune in the first place.

The Superinvestors of Graham-and-Doddsville

Think always of price and value.

With a significant Margin of Safety in place, something good might happen to me.

Size is the anchor of performance.

Always buy the business, not the stock, mentally speaking.

The greater the potential for reward, the less risk there is.

Don’t make easy things difficult.

Potential for profit will exist as long as price and value diverge in the market.

5/5

Reflections On Your First Six Months (Or So)

Hello Little Lion!

Another 90 days (+/-) have passed since we last wrote and we thought it was time to catalog a few observations once more.

You went on your first cross-country trip by commercial jet in April. We decided to invest in a stroller and car seat system that were more travel-friendly and it was definitely worth the money. While we were a bit anxious about getting you and your equipment through security, onto the plane and then back off on each leg of the journey, the thoughtful design of our purchase made that part of the trip relatively stress-free, and believe it or not we got a lot of support and patience from the people in the TSA and the gate agents and flight attendants. You of course managed to fill your diaper several times before, during and after the flight but Papa Lion figured out how to get you changed in the tight quarters fairly quick and by the third time he felt like he was a pro and could do anything!

Our friends and their little daughter were so happy to get to meet you and spend some time with you while you were still little.

You slowly started to lose all your birth-hair over the last few months as it was replaced by new hairs you’ve grown outside the womb. You came into the world with a full head of fairly thick and long hair, and the way it fell out was so funny and left you looking wise beyond your years– you developed a “Philosopher’s crown” of long hair on the side and back of your head with a big bald spot on top. It’s now all replaced, except for a light patch on the back of your head where you pivot around to look while on your back. And also, your extensive original side burns, which remind us of the style of the Orthodox Jewish men.

Your teeth started coming in at four months! You have seven along the top and the bottom right now and you continue drooling and fingering your mouth so we think there are more. You’ve fattened up considerably from when we last checked in. We’re sorry to say we hardly recognize your early baby pictures, because we realize they are a glaring example of our first mistake as parents– not understanding how important it was to get you some extra supplementation with formula feeding. We really agonized over that decision and how to go about it but the encouragement to do so was unanimous from the professionals we consulted with along the way and they were absolutely correct. The tongue-tie you were born with just made it impossible for you to be a purely-breast fed baby.

Your mother, the Wolf, has worked tirelessly since your birth to pump for you so that you still get your primary nutrition from her breast milk, something we know is specially formulated just for you and your needs. We are happy that you shot right past our ignorance with her extra love and care for you and at this point no one would ever suspect you had started out the way you did if we didn’t tell them. You’ve had one minor cold that led to a few days of coughing and runny nose but aside from that you’ve been disease-free, cheerful and growing in weight and strength every day. Whereas last time we checked in you still looked and felt in our hands like something new and fragile, now you have some “heft” and chunkiness that makes you stand out as your own person.

Your mobility development as been amazing for us to watch! You learned to roll over a few months ago and just in the last week you have begun spinning on your stomach. You’re not yet scooting or crawling but that’s where you’re going next. By rolling and pivoting, you can get to a lot of places. We can no longer set you down on the middle of your play area and expect to find you there a few minutes later. And we’re having to get more and more creative at bed time in corraling you on the bed because you like to roll around a lot now as you continue practicing mobility in your sleep. We lay you down one way and come in at our own bed time to find you have rotated a completely different way.

You started sleeping through the night a few months ago, and we were so grateful to get a few weeks of mostly uninterrupted sleep. But you’re still growing and changing, and you’ve “regressed” to wakefulness at night again as you’re sensitive to our movements and your own, which are many. Sometimes you wake up in the middle of the night, talk to yourself and coo and play for fifteen or twenty minutes and then decide to go back to sleep! It’s really cute, but really challenging for us to get our rest right now. We’re never mad about it, though, we know this is what we should expect and we understand how important it is for you to keep growing and changing and we know we’ll get back to a place where we can all sleep peacefully. Eventually.

One thing we are so satisfied with right now is your incredible focus and self-reliance while playing. Your concentration and ability to emotionally self-sustain have grown over the last ninety days and it is very easy to lay you down on your mat and see forty-five minutes pass before you need an emotional recharge from us. Your toys are simple things– plastic hair rollers, wooden rings, rubber “muffin wrappers”, colorful bandanas, a geometric “wire frame” ball with holes for your fingers. You like test the properties of these toys in endless ways, handling them, chewing them, squeezing them, turning them around and around and looking at them from different angles, combining or swiping them past one another. Your at a stage where simple things that allow you to repeat and refine an operation over and over again are plenty stimulating for you. Every now and then you’ll look for our eyes, to see if we’re near, or to see if we’re watching, but mostly you like to just focus on what you’re doing intently.

Your verbalizations have changed, too. Cooing, quick breathing, incoherent chattering and shrieking. Oh yes, the shrieking! Sometimes you will use all your might to summon your voice and expel

 

(at this point, several weeks ago, you woke from your nap, I set my laptop down and failed to return to this post and complete it. So I am posting it as is… because you’re now 1.5 months older than when I wrote it and a lot of changes have taken place again!)

Thoughts on Constructing A Library

I am going to jot a few notes on the subject of library (as in, personal book collection, not edifice) construction that I’ve been considering lately.

When reading stories of intellectual and political figures of the past, such as Thomas Jefferson or Napoleon Bonaparte, I realized that possessing a substantial library of works of interest and fame was part of standard operating procedure for literate men of the past. When I say substantial, I am talking about private collections numbering ten to twenty-thousand individual hardbound volumes, or when traveling, taking one or two trunkloads of books with the traveler to aid in research and study.

It’s a pretty different commitment to book warehousing and travel from having a few shelves of things you’ve read, or grabbing a couple books and stuffing them into your suitcase for an upcoming flight. Even in the age of Kindle, it’s akin to having a multi-gigabyte device dedicated solely to storing your library.

I haven’t kept track of how many books I’ve read so far in my life, and it’s not exactly apples-to-apples to include childhood picture books in the same measure as thousand page social philosophy treatises. But even if you excluded everything I read before age 19 or 20, which is probably the point in my life where I got “serious” about reading and was mostly reading non-fiction for information and analysis rather than fiction to pass the time or have my imagination stimulated (although, like many teenagers, I did manage to consume Atlas Shrugged during this “non-serious” period), I would still feel comfortable saying the number is “thousands”, especially if you include partially read titles. Probably less than five thousand, but definitely more than one thousand.

I don’t have most of those titles in my possession. Over the last seven or eight years, I consumed many works (especially about business, investing or economics) digitally, and over the last two years I have become an active “purger”, selling, donating or simply tossing books I didn’t bother to read, didn’t bother to finish or didn’t think I’d get any additional value out of in owning them. Most of what is on my shelf at home right this moment are either unread-waiting-to-be-read, or read-and-coming-back-to-them titles. I guess you’d call the latter “reference” titles, but I actually have few reference titles and I mean more of the idea of doing a full-reread to see how my understanding and appreciation of what I previously deemed a worthy title has changed as I’ve changed.

I wonder if purging is a good approach for a few reasons. One is that I have a child now, and hope to have more. I like to think I’ve spent a lot of time reading and sorting knowledge contained in books and I’ve wasted my time on many in order to find the few quality gems, the essential titles in some field that can quickly give one a nuanced understanding of the major and minor issues alike in some discipline. This time I’ve invested is a sunk cost, and being able to hand over a ready-culled library of the “classics” and “greatest hits” to my children and grandchildren seems like part of the social capital of our family.

A problem I have with this logic is that I found a lot of these books by exploring specific questions I had prior to reading them. I arrived at the good stuff through a meaningful epistemological journey that probably would not be as valuable or even as coherent as it was if I had leapt straight from my starting inquiry to the most elucidated truth in the best book. I had to fight for the knowledge I came by and do my own hard thinking and analyzing as I went. Handing someone a ready-constructed library of “essential knowledge” lacks context and it also lacks respect for their own curiosity.

Similarly, as the RIE-philosophy of infant care-giving reminds us (I think derived from Montessori), when you teach a child something, you take away forever his chance to discover it himself. There’s something cognitively valuable in the act of discovery that inheriting a library might obviate.

On the other hand, “on the shoulder of giants”… so perhaps my issue will see farther than me if they start not at the starting line, as I did, but far beyond the finish line in another race entirely.

Another problem with purging is that we are quickly losing a sense of literary history and context with the rise of Google and Amazon. With Google, we convince ourselves that anything worth knowing can be easily searched for, and that it isn’t important to understand the source or genesis over time of certain ideas, only what the latest conclusions are. With Amazon, we come to understand the literary universe as being composed of recently published, hot-selling titles (usually rehashes of old ideas, reformulated for the latest audience fad or interest) and a few older works deemed “classics” because they don’t manage to offend anyone. There are literally hundreds of thousands of titles people used to read, adore and consider categorical in their respective field that aren’t in print and that are essentially invisible to modern readers unless you know what to look for. There are also thousands of titles that reflect the losing side in a historical conflict, of ideas or arms or otherwise, that are not considered “truthful” simply because that side lost. Those are perspectives worth thinking about still if one wants to hone one’s critical mind and maintain a level of scientific objectivity in one’s thinking.

So I worry that some of the great stuff I’ve come across, my children will simply not see if I don’t keep it in my library for them. Especially if they are about ideas I think are important and honest, but which end up “losing the battle” during our lifetime and become non-PC. Down the memory hole!

Storing all these books has an economic cost. There is also search costs in looking through them when seeking a title out if they’re too numerous. And while I’ve spent tens of thousands of dollars on books over the years, I’ve mostly acquired paperbacks. I wonder if these are durable and can stand the test of time.

I am currently not resolved on the question of “To construct a library for myself and my posterity, or not?” One thing I do know, is that there is something wrong with a home (or office!) that contains no books, or that contains only books selected by others and not by oneself, or received for promotional reasons alone. It would be a major mistake to raise children in a place where books weren’t an ever-present part of their surroundings, even if the total quantity and methodology of selection behind the “library” remains in a negotiated state.

Review – Baby-Led Weaning (#review, #books, #parenting, #babies, #children, #food)

Baby-Led Weaning: The Essential Guide to Introducing Solid Foods-and Helping Your Baby to Grow Up a Happy and Confident Eater

by Gill Rapley, Tracey Murkett, published 2010

If you pay close attention to certain parenting and child development texts, you are likely to notice one of two paradigms at work– the exogenous development approach and the endogenous development approach. Those are fancy words I just thought up to say something simple, which is that you either believe children can develop pretty well on their own, with parents simply playing a nurturing, supporting role; or else you believe that children are mostly helpless to develop on their own, with parents playing a primary, directorial role.

The idea of “Baby-Led Weaning” (BLW) falls firmly into the endogenous development model, along with other philosophies we fancy such as RIE for parent-infant communication and relationship building, self-esteem centered personal growth philosophy, Montessori for educational and pedagogical practice, and nutrition-based health and well-being (ie, vaccine-skepticism). People who take the BLW approach to transitioning their infant to solids, aka “adult food”, see linear continuity between the infant’s ability to feed themselves at the breast and the later skill of the toddler being capable of feeding themself at the table. The BLW user asks the question, “Why should there need to be a period in the child’s eating skills development where they regress to parental intervention with mush and spoon?”

The actual practice of BLW doesn’t require more than a paragraph to describe. So long as your infant has reached the motor skill maturity to sit up on their own (or you are willing to prop them up on your lap for the duration of their “meal”), you can put a small variety of 2-inch long, stick-shaped food items from the adult meal in front of them and let them choose what and how they’d like to eat. If they want more, you can offer them more as they go. The first few weeks and months of learning to eat actually consists of them “playing” with their food by exploring taste, texture, smell and other properties of the foodstuffs– only later do they discover that the food is nutritious and helps to satiate their hunger. Plan on letting them discover at their own pace, cleaning up the inevitable messes and continuing to provide most of their sustenance by breast or bottle until they’re fully capable of getting the majority of their calories and nutrients from shared family meals, likely past the one year of age mark.

That’s really it. While there are certain foods that are easy to choke on (grapes not cut in half length-wise! hard nuts which are difficult to chew! pieces of fish or animal flesh with sharp bone fragments!) and things children may develop allergies to if exposed too early (honey! dairy! peanut butter?!), like the risk of rolling over and crushing an infant via co-sleeping being almost nil for a family that does not consist of alcoholic cigarette smoking fat asses, BLW is essentially safe and the risk of choking is overblown. It turns out that infants have a gag reflex that begins near the front of their tongue and not the back, and most “choking” actually happens with spoon-fed infants wherein the eating utensil circumvents the natural choke-avoidance mechanism and allows food to get into the back of their throat when they haven’t fully developed the muscle control to swallow.

Like most endogenous approaches, the biggest challenge for parents and other adult-caretakers is having patience to let the infant explore at their leisure and behave as comes naturally without thinking they need to get involved and add something to the mix for any reason other than safety. The temptation to “help” the child learn to eat or to show them a more “efficient” way to get the food into their mouth, for example, must be avoided if the child is to develop the important motor skills of controlling food with their hands, not to mention the need to let the child determine that food is safe and enjoyable to eat. Chewing and sucking endlessly on the same piece of sweet potato stick may not seem like an effective way to eat one’s meal for us, but for the infant it is an essential part of figuring out “What is this?” and “What can I do with it?” Infants are highly empirical and don’t really have an ability to learn by causal explanation and the provision of logical theory. They need to just do stuff on their own.

The book is much longer than a paragraph because it spends a lot of time repeating itself, calming potentially frayed nerves concerning overwrought risks, relating a series of “BLW Stories” of parents who did it with their small kids and had success, and interjecting numerous verbatims from happy practitioners seemingly at random in an attempt to build credibility in the approach. This last bit is likely aimed at female readers– sorry moms, but your cultural appropriation model is highly consensus-based due to evolutionary biology.

A good primer for anyone interested in the approach, though you can skim-read it.

3/5