Wednesday, 29 August 2012

Toyota Under Fire by Jeffrey K. Liker and Timothy N. Ogden

I know it sounds silly but I found myself having read 50 pages and never jotting down a single item.  I literally lost myself in this book.
The first 60 pages discuss how Toyota's culture and operations allowed it ride out out the recession and become stronger for it.
The remainder covers the issue of sudden unintended acceleration (SUA) and the Toyota recalls that followed.
It reads like an episode of Law & Order.  I loved it.
Read this book if you want to know the true facts about the recall and why the culture of problem solving at Toyota unintentionally caused so much angst in Americans.
It also covers how Toyota is changing they way they listen to customers by also understanding their worries and concerns.
The last few pages covers "Lessons" from the crisis.  The book is worth reading just for these few pages of wisdom.
The book is a fascinating compilation of data and facts that obliterates all the fallacy and myth about the recall.
After reading the book I Googled (Saylor sudden acceleration) and it's amazing the number of articles that contain so much false or misleading information about what was really happening at the time.
Just as Liker and Ogden say, some of the news pieces written appear to be based on innuendo, opinion and in some cases pure fiction.  There was very little fact finding or discovery going on by the media.  They just seemed to report everything that someone else said.

"Who dunnit?"  It was an improperly secured floor mat but public opinion didn't want to believe it and some still don't.
I wrote the next 2 segments in the hopes that people browsing the web for the real cause of the accident will find this and give themselves some closure.  The book covers the below excerpt in about 6 pages but I wanted everyone to pay special attention to it so I gave it a louder voice in this review.
A few days before the Saylor family climbed into a dealer loaner and crashed,  another person named Frank Bernard using the exact same vehicle had an almost identical experience.
Frank Bernard was using the same car a few days before the Saylors and had the accelerator pedal stick causing him to speed to between 80 - 85 mph.  He used the brake to get down to about 25-30 mph and shift into neutral on the side of the road.  He turned off the car, got out and removed the floor mat and went about his day.
Upon returning to the dealership he informed the receptionist what happened.  Bernard assumed that the receptionist would pass the info along....the receptionist thought that Bernard would tell the service technician.  Three days later Mark Saylor and his family would get the car as a loaner and die in a crash.
The report is 29 pages so I've summarized the main points with the page numbers so you can read for yourself.
  • The floor mat is indicated as being a possible cause ( p 14 - 15)
  • How floor mats are stored and installed at Bob Baker Dealership (p 16 - 18)
  • Recreation of pedal sticking (p 19 - 20)
  • Frank Bernards story and the story from the receptionist (p 21 -23)
By the time I was done reading all of "Toyota Under Fire" I was asking myself 2 questions.
  1. Why does American culture desire conspiracy fueled by speculation as opposed to searching for facts?
  2. How can I get a job at Toyota?
My favorite piece is a personal one.
"Akio Toyoda often cites Jim Collins's book "How the Mighty Fall" to remind listeners that Toyota is not immune from mistakes and problems....That fourth stage is where Toyota's actions diverge from Collins's model.  Those are the actions of a company that does not have, or does not have faith in, a strong culture.  Toyota did not do any of these things.  What Toyota has done is follow the recipe that Collins advocates: old-fashioned management virtues such as determination, discipline, calmness under pressure, and strategic decision making based on careful sifting of the evidence."  Toyota followed the Toyota Way!

Thursday, 23 August 2012

The Accidental Theorist

  • First Published: 1998
  • Type of Work: Essays
THE ACCIDENTAL THEORIST: AND OTHER DISPATCHES FROM THE DISMAL SCIENCE is a collection of twenty-seven of Paul R. Krugman’s best essays that were written between the fall of 1995 and the summer of 1997. Throughout the book, Krugman uses clear English interspersed with understandable models and examples to communicate to the general public simple truths about economical issues, including unemployment, supply-side economics, corporate downsizing, globalization, economic growth, and financial speculation.
Krugman’s essays unravel and simplify some long-held and lofty economic ideas at a level that can be mostly understood by the general public, including insights on the effect of production efficiency on labor demand, the impact of globalization on economic policy, and the unimportance of the trade deficit with China. By examining pundits from across the political spectrum, Krugman enlightens the reader about the workings of the national economy, pointing out some of the pitfalls of the “supply-siders” of the Reagan-Bush era, as well as those of the “strategic traders” of the Clinton administration.
Since the book covers many important technical topics with great clarity, the reader’s desire to better understand economic principles, as well as the economic rhetoric of politicians, is encouraged and reinforced. However, this strong point also becomes a weak point of the book. Krugman not only needs to make the general public aware of the broad economic issues and problems, but he also needs to better address some practical solutions that might help resolve more of the problems. Nevertheless, the book is basically solid, and what Krugman has to say is clear, important, and provides the common public with a better overall understanding of the workings of our national economy.

Friday, 17 August 2012

Book Review: Confessions of an Economic Hit Man

I just bought a new book named "Confessions of a Economic Hit Man" by John Perkins. 

This book explains great secret stories of world's biggest fraud done by famous people across the globe. 

Economic Hit Man are highly paid professionals who cheat countries around the globe out of trillions of dollars. Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex and murder. They play a game as old as Empire but one that has taken on terrifying dimensions during this time of globalization.

John Perkins should know - he was an economic hit man for an international consulting firm that worked to convince poorer countries to accept enormous development loans - and to make sure that such projects were contracted to U.S. companies. Once these countries were saddled with huge debts, the American government would request their 'pound of flesh' in flavours including access to natural resources, military cooperation and political support.

Confessions of an Economic Hit Man is the story of one man's experiences inside the intrigue, greed corruption and little known government and corporate activities that the U.S. have been involved in since World War II. The message is clear, unless these clandestine activities are stopped, they will have dire consequences for our future.

You can buy this book via this link -

Thursday, 9 August 2012

Book Review: The Black Swan (Nassim Nicholas Taleb)

It’s been some time since my last book review, so today I’ve decided to share my impressions of the latest book on probability by the ”financial dissident” Nassim Nicholas Taleb. If you still haven’t read his previous book — Fooled by Randomness (see my review here) — I strongly urge you to do so, even if you aren’t into trading. His latest book —The Black Swan — became a major bestseller and is a very important book, both for traders and for everyone else who works with the randomness.
The main idea of the book is that we can’t avoid the Black Swans (the rare events that are unpredictable in their nature) but we can try to decrease the amount of ”bad” Black Swans in our life and increase the amount of ”good” Black Swans — first, by admitting that our knowledge is very limited and by stopping to act like we can forecast rare events and, second, by choosing the life strategies, in which our potential success would be scalable and could surpass the potential failure. Other than that, the book offers the following important theses:
  • What we don’t know can be more important than what we think we know.
  • We live partly in Extremistan and partly in Mediocristan. Rare events are very important (and are unpredictable) in Extremistan. Rare events have little impact in Mediocristan and they usually can be predicted.
  • Financial analysts, experts, strategists, portfolio managers generally don’t posses much knowledge about the reality of their profession, but for some reason general public listens to their opinions. Taleb sates that it’s completely unjustified.
  • Bell curve (“the Great Intellectual Fraud”), although is a viable model in Mediocristan is a fallacy in Extremistan.
  • Modern world becomes more of Extremistan and less of Mediocristan.
  • Our minds are bound to search and unite different facts and reasons — that’s the problem of the narrative fallacy.
  • Pure probabilities don’t exist in Extremistan, they are properties of the artificial models — such as casinos and the study problems.
  • Fractal models of probabilities can’t predict the impact of the Black Swan, but they can give a slight hint, making a Black Swan Gray.
  • In Extremistan, metaphorically speaking, if you don’t chase the train, you don’t get frustrated by missing the train — if you don’t rely on the appearance or the lack of the Black Swans your state of mind won’t be disturbed by them.
Although I liked Taleb’s previous book (Fooled by Randomness) more, this one also deserves attention and was very interesting despite the small amount of the new ideas compared to his previous work. I’d like to point out the following advantages:
  • Interesting read due to the literary style of the author. I can imagine how boring could the book on such topic be if it would have been written by some “professor”.
  • Deeper understanding of the rare unpredictable events compared to Fooled by Randomness.
  • More practical advices. They are more of ideas than advices but still can be quite helpful.
  • A book with praises to both Popper and Mandelbrot in it? I buy it :)! (Yeah, that’s quite subjective.)
But to add some negative to this rather positive review, I’d want to mention that I liked Fooled by Randomness more than this one. Maybe that’s because the first book on a topic leaves a strong impression, or perhaps because of a rather bad translation (I couldn’t find The Black Swan in English here). Anyway, let’s list some disadvantages:
  • As it was the case with Taleb’s previous book, the structure of the book is quite bad, there is still a lot of subject jumping even inside the sub-chapters.
  • Nassim Taleb is a genius but his style is quite heavily ridden with snobbery of an erudite and an intellectual.
  • There were many things, about which I’d disagree with the author and which needed further discussion, but they don’t eliminate the importance of the main problem of the book.
To sum it all up, if you still haven’t read Fooled by Randomness, go, read it. If you liked it and want more, read The Black Swan. If you didn’t like it, then there’s no reason for you to read The Black Swan. But, apart from the direct usefulness of Taleb’s books, there’s always a big portion of aesthetic pleasure in reading his books. So, if you are looking for something to read, you can always stop by The Black Swan and combine the useful with the pleasant.

Sunday, 5 August 2012

Book Review : Competitive Strategy by Michael E. Porter

Michael Porter is Professor at the Institute of Strategy and Competitiveness at Harvard Business School and a recognised authority on competition and competitive strategy.  His book Competitive Strategy was first published in 1980 and quickly became required reading on many business studies and MBA programmes around the world.

The book was clearly written to be a text book as it provides a very structured and somewhat clinical description of the subject, rather than the more narrative approach preferred by authors targeting a broader audience.  Nevertheless, it is an important work that does have a place on the bookshelves of practitioners as well as academics.

The book states that its objective is; “to provide a comprehensive framework of analytical techniques to help organisations analyse their industry as a whole and to predict their own future evolution, understand their competitors and to translate this analysis into a competitive strategy for their business.”

The book is organised in three parts.  In Part 1, the book presents a comprehensive framework for analysing the structure of an industry and its competition.

In Part 2, Porter shows how the analysis from Part 1 can be used to develop a competitive strategy.  In this section he places a great deal of emphasis on how that strategy should be adapted to suit the circumstances of a particular industry.  A strength of the book is therefore its recognitions that there are no “one-size-fits-all” routes to success and that successful strategies are based on the thorough analysis of a large number of variables.

In the final part of the book Porter considers some of the major strategic decisions organisations are likely to face, such as whether to increase capacity, enter new markets or vertically integrate.  Given the somewhat generic nature of the rest of the book, this section may at first sight see rather specific.  However, the point I believe Porter is making is that change is inevitable and the strategies he describes are ones that organisations will inevitably have to consider at some point in their development as markets mature and as they attempt to react to or our-manoeuvre their competitors.

Although widely regarded as a seminal work, the book has been frequently criticised for being too static in its analysis, implying that markets do not change, a criticism Porter dismisses as a misunderstanding.  While I accept Porter’s point, it is easy to see how a book that is so detailed in its analysis can be viewed as ignoring the dynamics of an increasing pace of change; after all, not many companies will have either the time or resource to conduct the sort of in-depth analysis that Porter advocates before making important decisions in today’s markets.  However, this does not make the analysis any less worthwhile, it simply emphasises the need for business leaders to be constantly in touch and well informed.

Finally to the difficult question – would I recommend the book?

I would certainly recommend it to anyone who is working on writing a strategic plan as it provides a useful check-list of the subjects to cover.  But for someone with a more general interest in marketing or business strategy, I would recommend “Dealing With Darwin” by Geoffery Moore in preference to this book, as Moor provides an eminently more readable description of the dynamics of strategic planning - Porter provides more of a check-list.

Click here if you would like to purchase a copy of this book.

* Author: Deepak Bhatt is a Strategic Management Consultant based at Ahmedabad, India. To know more about him, you may visit 

Saturday, 4 August 2012

The Innovator's Dilemma by Clayton M. Christensen

This book demonstrates how great managers in top-performing companies can lead their companies into financial disaster even while adhering to what were considered best practices during the late twentieth century.  Throughout the book, Dr. Christensen draws insights from his observations of three industries (data storage, earth moving equipment, and steel production) in which the disruptive technologies resulted in lost market share for established firms that were unwilling adopt new standards.

Dr. Christensen provides a framework for managers to recognize disruptive technologies and he performs a case study of electric car technology to communicate how managers should react to the dual threat and opportunity presented by disruptive technologies.  This landmark book deserves credit for reshaping strategic thinking on how and when to adopt and market new standards for products (and services) in every industry.

According to Dr. Christensen, established firms typically focus their energies on sustaining technology research and development and thus make incremental improvements to existing technologies that comply with the standards and specifications specified by the market.  Working under such constraints naturally imposes limitations on the direction of these R&D efforts resulting in gradual improvements that bear little risk of market rejection.

The underlying assertion of this book is that the risk-adjusted rewards associated with performing R&D for technologies that deliver the anticipated (future) needs of the market may outweigh the risk-adjusted rewards associated with performing R&D for sustaining technologies.  Managers have historically been taught to listen and respond to the immediate or near-term needs of the market, so allocating resources to development of disruptive technologies is a tough sell.  In addition, disruptive technologies often have not only little or no immediate market, but also they may not work with complimentary technologies and infrastructures (e.g., computer designers/assemblers must develop new chases to house 2.5 inch hard drives).

In my humble opinion, engineers and scientist have always recognized the dilemma described by Dr. Christensen but have never communicated the issue so eloquently.  The lifecycle of development for nearly every technology platform exhibits diminishing marginal returns in improvement for incremental development efforts.  New technology platforms must always be developed to bring significant increases in value to markets towards the end of any product development lifecycle.  The power of Dr. Christensen's message is that companies must,
  1. learn when to investigate, develop and deliver disruptive technologies (sooner)
  2. how to effectively organize a company to stimulate development of disruptive technologies
  3. how to recognize the value of disruptive technologies through conservative initial marketing practices, targeting appropriate markets, and frequent redesign during the early stages of development
By account of the destruction of numerous blue-chip corporations, Dr. Christensen establishes the imperative that every company must have a strategy to address disruptive technologies.  He clearly demonstrates that many technologies are susceptible to profound innovation and that competitors with disruptive technologies (usually new entrants to markets) will likely attack your market from below, i.e., disruptive technologies are generally not as robust as existing technologies.  Thus every company must,
  1. consider developing disruptive technologies,
  2. recognize the threat of disruptive technologies as they appear in the market,
  3. be prepared to incorporate the standards associated with these disruptive technologies into their products/services.
It is noteworthy that some companies have survived and remained profitable by maintaining existing technologies while losing overall market share to competitors that develop and market disruptive technologies.  According to Dr. Christensen, these companies must retreat up-market to survive, e.g., hydraulic technology replaced cable-actuated technology in earth moving equipment in all but the most heavy-duty applications.

Dr. Christensen points out that development of disruptive technologies requires a major shift in how companies do business.  First, management must be willing to accept the higher probability of failure associated with disruptive technologies.  Second, established firms must be willing to find new markets for these products/services rather than pushing disruptive technologies towards existing customers.  Finally, cultural norms in many organizations may result in across-the-board lack of support for disruptive technology development efforts if such technologies are not perceived to be central to the mission of the firm.  Regarding the last issue, Dr. Christensen proposes that companies are well-advised to spin-off or otherwise create separate incentive systems for individuals involved with developing a disruptive technology.

Dr. Christensen notes several other advantages to creating more distinct operating divisions to handle development and marketing of disruptive technologies.  First, large firms are generally dissatisfied with investments that do not generate cash from operations for extended periods of time.  Furthermore, even if an investment in a disruptive technology generates cash, it is likely to initially capture only a small fraction of its overall market - another typical cause for a project cancellation within the confines of a large firm.  A separate division is more likely to persist with its development efforts if all bets ride on the success of the disruptive technology.  Such a division is also more likely to act entrepreneurial by initially targeting very specific customers (thinking small) rather than changing the technology to suit existing customers.

The last few chapters of the book consider the important point that disruptive technologies are likely to require several iterations of product redesign before they find a market.  Thus, he strongly recommends that companies leave themselves enough cash to improve upon their technologies after initial development.

This book is a must read for every technologist and business manager.  With a greater understanding of the applications presented in this work, large corporations will eventually build this thinking into their cultures and embrace the development of breakthrough innovations.  Dr. Christensen has proven that standards will continue to be destroyed and redeveloped, and that markets can be made for disruptive technologies!

Wednesday, 1 August 2012

Persuasive Manager

The Persuasive Manager argues compellingly that strategic communication lies at the core of business leadership, and helps organizations run smoothly and effectively. What is persuasion, and how should managers balance their ability to persuade and exercise authority without becoming authoritarian? If credibility and mutual goodwill are to be established, then the need to inspire loyalty and build interpersonal relationships becomes an essential managerial strategy. The book explores the role of persuasion at different levels of the corporate hierarchy how does a manager convince her subordinates to initiate change? How can peers, or customers and suppliers, be won over and their opinions influenced? Persuading bosses is a particularly tricky business, so how does one use the perfect mix of tact, reasoning, discussion, and ingratiation? With its wealth of real-world illustrations, scenarios, and tips, The Persuasive Manager is the perfect communications roadmap for all managers.

The IIM Ahmedabad Business Books bring key issues in management and business to a general audience. With a wealth of information and illustrations from contemporary Indian businesses, these non-academic and user-friendly books from the faculty of IIM Ahmedabad are essential corporate reading. 

M.M. Monippally is a Professor of communications at IIM Ahmedabad. A specialist in strategies of managerial communication, persuasion, and bad news delivery, he has designed and run training worksops for middle and senior managers at Morgan Stanley, Reuters India, ICICI Bank, MICO Bosch, Global Trust Bank, and many other organizations.