Book Summary: David And Goliath-Underdogs, Misfits and The Art of Battling

Title:  David And Goliath- Underdogs, Misfits and The Art of Battling

Author: Malcolm Gladwell

Publication: Little, Brown And Company

To be named among 100 most influential thinkers by TIME -2005, surely has a charm to it which draws enough readers to your books/articles especially when you are a master story-teller. And that is what happened to me as well. I wouldn’t say I was disappointed after reading this book.

The idea of the book:

The book opens up with the recreation of the very famous story of David and Goliath. But the analysis & reasoning behind how David defeated a giant – Goliath is completely contrasting from what we knew (or at least I knew). The broader theme of the book revolves around how underdogs & misfits fight and win consistently (Part-1 & 2 of the book) and how battles be it civil orregulatory ones- are not won despite having huge power(Part-3 of the book).

The book is divided in three parts;

Part 1: The advantages of disadvantages (And the disadvantages of the advantages)

Part 2: The theory of desirable difficulty

Part 3: The limits of power

Part 1: The advantages of disadvantages (And the disadvantages of the advantages)

The first piece of the story under this part covers a person called Vivek Ranadive who is coaching the team of girls (his daughter being part of the team) for basketball which he never played in his life and that to for competing in National Junior Basketball. This team beats hands down more professionally managed teams with best of the team players in it one after another in their very own game of basketball. How they did it?? –By fighting the game completely in an unconventional way – which was opposite of the way professionals were playing with a defined set of skill generally required in basketball. The larger point in this context comes from the study of political scientist Ivan Arreguín-Toft which says only 71.5% of times, ten times bigger populated & more armed countries have won a war against very small countries which are conventionally not very much armed in past two hundred years. Digging deeper Ivan found out when small countries fought wars with bigger counter-part with unconventional warfare tactics (guerrilla tactics) their winning probability increases drastically.

The revealing point: The author emphasizes, underdogs and misfits do not score victory just because they work hard or by some miracle but refusing to fight in a conventional/defined way in which big team is good enough or familiar with. So, identifying an unconventional or alternate way to beat the giants (who are good at only specified skill set conventionally used in that game/war) and working up rigorously to develop that alternative skills set. The event of underdogs beating the giants is not an improbable event actually, (we perceive it as improbable and hence we glorify it) underdogs have consistently won in many battles/games.

“Why do we automatically assume that someone who is smaller or poorer or less skilled is necessarily at a disadvantage?” – Quote from the book.

The second piece of the story covers two running themes 1)Parenting and effect of money 2) Class size and effects on students’ learning.Without getting into specific examples. The discussion dwells on the relationship between the amounts of money with parents have and how that does have an impact on parenting. As money increases, parenting becomes more effective up to optimal points after that ‘diminishing marginal returns’ kicks in. So after that point, richer you are it is more challenging to perform parenting.(ever heard about rich spoiled brats!) Likewise too much of a class-size is badly affecting the learning of the students but important to highlight too less class size also does not optimize the ideal cohort learning.

The revealing point:Targeting premiers schools where class–size is too small on the name of enhanced and engaging teacher-student relationship may not yield the desired results as your beloved ones may never get exposed to ‘peer learning’ orget a diversified learning experience by being part of bigger size class. Same why rich parents have nothing to smile about but to worry about if we go by studies done, beyond a point too much of money works as a spoiler for the kids. So, here seemingly the advantage of having too small a class or too much of money may turn out to be disadvantageous in reality.

The third piece of story questions do getting into most prestigious institutions always works in our best interest. It talks about how the world’s one of the best group of impressionists did great eventually by not getting accepted by Paris Salon – the most important art exhibition in all of Europe around 150 years back. Similarly, getting into Ivy League universities may not effectively lead to super achievements which you dreamt of but it may kill your interest or may induce frustration/depression as you are unable to cope up with the supreme heat of the competition among the students. (this point is well accepted & understood as we have seen many stories around us or in Hindi movies – 3 idiots! OR you may have lived yourself!)

The revealing point:Getting into the Ivy League may not turn out to be as advantageous as it was thought of, many times it may turnout to be disadvantageous. Placed in highly competitive and near burn out environmental settings may lead to higher dropouts, depression/frustration among students and lack of passion. Being part of moderately good, nurturing anda conducive environment where you feel comfortably in your ‘zone’ brings best out of you.

Part 2: The theory of desirable difficulty

This portion of the book was most adventurous, thrilling, eye-opener and also painful. It covers stories of kids with dyslexia and also a quite disturbing description of kids affected by leukemia – blood cancer and the story of Martin Luther King Jr.The theme this part highlights is that more difficult situations one has gone through more alternative skills development happen which is not there with other sets of people who have not gone through that difficult time period. And this leads to some of the time unbelievable success achieved due to the difficulties and the response system one has developed by honing that alternative skill set.  That is the reason author calls it ‘desirable difficulty’.

Part 3: The Limits of Power

This portion throws lights on persistent troubles which were going on between Catholics and Protestants in Northern Ireland during 1970s. With refreshing angle, the author shows how government despite having full of power/authority/ force and all the resources to control such uproar fails miserably. Few other beautiful stories to draw an analogy with the above theme are also covered like the story behind three strike law in California and so on which I’ll not dwell into.  When a section of people sees the entity/government as a source of power which is not perceived as a fair & just, then these people stand up most stubbornly and steadfastly against it. Many freedom fights and civil fights depict this quite convincingly.

Note: My intention was just to summarise some of the important highlights and learning points from this book, so I refrain from criticizing some of the debatable points in this book.

Making of curative society

I was searching something in my bookshelf and serendipitously I found a book – “The Black Swan” by Nassim Nicholas Taleb which I read a few years ago. Now I am re-reading this book. One particular paragraph of this book in prologue has made me ponder over it and it has set in motion chain reaction of thoughts which has resulted into this blog. The lines go like this….

“……Who is more valuable, the politician who avoids a war or the one who starts a new one (and is lucky enough to win)?

It is same logic reversal we saw earlier with the value of what we don’t know; everybody knows that you need more prevention than treatment, but few reward acts of prevention. We glorify those who left their names in history books at the expense of those contributors about whom our books are silent. We humans are not just superficial race (this may be curable to some extent); we are very unfair one.”      Page: XXIV – Prologue, Black Swan

Let’s walk through a simple experiment: Imagine that you ride a two-wheeler but do not wear a helmet.

Situation 1: Mr. X with a lot of persistent efforts eventually convinced you (reminded whenever you were going out) about the importance of wearing a helmet, resultantly you developed a habit of wearing a helmet while riding a two-wheeler. Because of this whenever you met with an accident there was never much of head injury due to which no real pain or trauma faced by you. So, non-occurrence of head injury has almost become un-noticeable.

Situation 2: You were not wearing a helmet & as usual you were riding a two-wheeler. One fine day you met with an accident with severe head injury and Mr.Y seeing you struggling & suffering on the site of the accident, took you to the nearest hospital and admitted you there.

What the above experiment tells you;

Mr. X almost does not exist in your memory as you never went through any tragic accident in your life involving head injury while riding a two-wheeler.

Mr. Y almost made a permanent mark in your memory as he came out as a savior/crisis hero during your tragic accident involving head injury (the pain/agony/struggle during & after this accident made you more remember this incident and hence the person who saved you).

Another analogy can be that we are more thankful to the heart surgeon who made us survive through a heart attack. But we are almost negligent or not enough thankful to the preventive healthcare practitioner who prevented us from having a heart attack in the first place. No wonder why preventive healthcare still grapples with non-acceptance by society at large (but it is changing now) when compared with curative healthcare.

The above experiments and many more surrounding us indicate one thing that as a society we are more curative than preventive. We have been observing through the history that society or broader system showers rewards-recognition-media coverage- glory-awards-accolades on those who have managed or controlled big crisis/damage/attack/natural calamity/ tragedy (Let’s call it ‘tragic event’ collectively)that society was facing. We remember such personalities who did troubleshooting and hence with glory secure permanent name in the history. But we never remember those who prevented or raised enough warning alarms because of which many tragic events never realized and we safely survived.

I hypothesize the alternative theory of making of curative society and share the reasoning behind why we are more curative society than the preventive one!

Ever since the creation of society, we have faced numerous tragic events. The general route society has taken is whenever there was an outbreak of such event people came ahead and provided cure or damage control/crisis mgt. to it. If part of society is smart enough it learns from such incidences/mistakes and starts building a preventive system in order to put down another tragic event before it actually surfaces. Fortunately, some part of society has done that which has established some preventive system. But a larger part of society still goes through curative way only.

But the key question is: why society keeps going back to curative design?

Reasoning: Society has created a feedback loop which keeps on creating the curative design as depicted in the below image;

Once the tragic event occurs it is inevitable for society to face it. Some of the human capital will come out to act as a crisis managers/ damage controller. As the crisis gets over generally significant glory-awards-rewards-media coverage-gratitude is showered on them. Because the society went through the entire incident so vividly and felt the pain/agony/struggle with so much visibility that we want to glorify it and make part of permanent memory for the society. Hence it promotes the mindset for damage controller/crisis manager which leads to the creation of the society which is good at managing crisis but not preventing it. When tragic event is prevented hardly besides few know about it and something which has never happened or felt how much importance or memory space society attach with it, almost zero. This leads to lack of motivation/glory/recognition for those who are working day in & out to prevent another tragic event. So less human capital eventually attracted to this kind of profession. Again that leads back to the status quo for societal mind set for crisis.

By creating the society which worships -troubleshooters/damage controllers/crisis managers, we have made sure that as a society we wait for tragic event to happen & then we see rise of heroes to save the day and If this is what has happened over the history we have successfully & deliberately created such culture and system which never motivates/encourages prevention of any such possible tragic event before it actually takes place because there is near absence (or not as significant as in the case of troubleshooters) of rewards-recognition-media glory-awards-accolades for the preventers. Hence no motivation to shift mindset/culture from curative to preventive.

In Hollywood movie-Reign of fire, Denton van zan says, “Envy the country that has heroes, huh? I say pity the country that needs them” I would re-frame it and say, “Envy the country that has troubleshooters/damage controllers/crisis managers. I say pity the country that needs them”

We are increasingly becoming more competent at curing or managing crisis but dishearteningly incompetent at preventing the crisis!

Conflict of interest: VC’s investment in rival start-ups

Deal 1: Mohr Davidow (VC firm) had investment in Navigenics as well as 23andMe.

Deal 2: Andreesen Horowitz(VC firm) had investment in photo-sharing company Instagram as well as Picplz.

Deal 3: Softbank (VC firm) had investment in Snapdeal as well as Flipkart.

Deal 4: Softbank (VC firm) has investment in Ola (india), Uber(US), Grab(SouthAsia) as well as DidiChuxing (China).

What is common to the above deals? Well, same VC firm has invested in two or more direct rival start-ups. Last few years have witnessed, increasing number of such deals wherein VCs have invested in rival start-ups. This observation has hit me hard as I started thinking how does this deal impact the key stakeholders such as start-up founders, Regulatory bodies, the core market in which start-ups are fighting and of course VCs.

Let us briefly discuss how this may create an impact on various stakeholders;

For VCs: Head I win, Tail you loose! : One of the most important stakeholders in the above-mentioned scenario is VCs. For VCs investing in rival start-ups may be trendy now as bigger VCs are increasing placing these kind of bets. One obvious reason identified after interacting with a couple of VC advisors, is VCs are also looking towards reducing the risk of their bet going in vain. (call it “risk mitigation strategy”) It is like when there are few sizzling start-ups which are look-a-like in the same market & when you have no clue which one is going to be the next blockbuster just invest in all of it or majority of it so whichever is going to go up eventually you are more assured that it will make money for you!

For Start-ups: “Money Trap?” :For most of the start-ups, attracting the VC funding may look like the holy grail. But a brilliant research article by Pahnke, McDonald, Wang and Hallen (2014) published in Academy of Management Journal found that investment of same VCs in rival start-ups may impede the innovation at the start-ups and also there is opportunity and motivation for VC to leak competitive important information to other rivals in which same VC is invested. When VC is invested in rival start-up firms it may so happen that VC may force two rivals to merge or acquire as SoftBank(VC) being investor tried to do in snapdeal with flipkart and Uber with Ola in the Indian market. Irrespective of what start-up founders & core team believed or dreamt about, forced merger/acquisition may happen to the whims and fancies of some VCs. Like Uber sold it’s SouthEast Asian business to Grab.(another rival funded by Softbank) Time is ripe that start-ups do certain check-list before going after VC’s money.

Such as 1. VC background checks if it has a considerable investment in another rival start-up(s), 2. The inclusion of certain clauses in ‘term-sheet’ and then into a definitive agreement which is legally binding agreement, which restricts VC to some capacity to invest in other rival start-ups or restricting access to competitive and confidential information (trade secrets) if VC is invested/or planning to invest in a rival start-up. For a start-up, mad rush after VC funding without doing proper background checks on VC may create more problems than solutions. Many angels & VCs never indulge in such activities of investing in rival start-ups but it is better for a start-up to act smartly!

For regulatory bodies: “Perplexed & lost”: Imagine you have huge war-chest (money) which you use to invest considerably in two majors competing start-ups. Since both start-ups are losing money big time in order to retain and increase customers by giving away deep discounts or providing unbelievable promo offers at throw away price, eventually you as a key investor decide to merge both entities and create one big giant. Now the merged entity will bleed less (lower burn rate) due to no significant competition. Here, an act of VC to safeguard their own interest by trying to force two competing start-ups to merge is directly impacting the dynamics of the market. Role of regulatory bodies (Like competition commission of India) which are enforcing anti-trust laws becomes crucial for maintaining the fair competition in the market. Unfortunately, many times such bodies do too little and too late. Regulatory bodies have to remain very vigilant and action-oriented when many direct competitors in the same market are backed by the same set of investors.

Data is new oil: RIL's move is not rule-changer but game-changer!

"Data is the new oil and India does not need to import it. We have it in super abundance and we have to ensure every Indian has access to it." Said by Mr. Mukesh Ambani (CMD of RIL) at Indian Mobile Congress which was held for the first time in 2017. If anyone had a doubt about the above statement by Mr. Ambani, it is now cleared after listening to the raft of announcements in 41^st AGM of RIL held on 5^th-July-18.

I read the full speech by Mr. Ambani and now I intend to do quick analysis of the digital initiatives announced in it and how it is going to possibly pan out and what may lie ahead.  

Digital initiative is all about the game of 3C .

The game of 3C :  Carrier – Content - Commerce

    

Death knell for low end feature phone manufacturers: Announcement of Jio phone 2 at Rs.2999 for new user & just for Rs.501 for existing Jio phone user in exchange of their Jio phone, may bring tremors in low-end and mid-end segment of smart phone segment which is majorly ruled by Chinese companies (having market share of 53% as per this article). The strategy is very simple here, to make diffusion of content (chat, videos, photos etc.) mind boggling in the country of 120+ crore of population, you first need to give to those who can’t afford the carrier/instrument/device (and hence the launching of Jio phone1) through which users can start consuming data. With the help of the common sense, we know that highest content consumption comes from three most popular apps YouTube, WhatsApp and Facebook – and Jio wants to tap into that –and hence the launching of Jio phone-2 with all these apps into it. I can anticipate that in future Jio will keep on rolling more such mobile–devices and certainly not only targeting for lower class but also for middle class. So, it looks like war has just started in this segment.

 Disruption in fixed line broadband space: RIL’s setting eye on the fixedline –broadband segment is going to be huge game changer. Players such as Telecom operators like BSNL, Airtel, Tata etc. and cable companies like Hathway and DEN Networks etc. and content providers like Star India, Balaji Telefilms, Zee Entertainment, Netflix, Amazon etc. will face strong competitive force. For Reliance the strategy is to control everything starting from creation of content (media & entertainment such as news18 and other channels which are owned by RIL), to the distribution of the content (through Giga fiber) and last is presentation of the content.(GigaTV, apps such as JioTV app, JioCinema etc.) Very fine analysis along with some counter –strategies against Giga fiber is provided in the article here in context with broader ecosystem of entertainment segment consisting of four parts; 1. Content 2. Format 3.Pipe 4. Terminal device. Bigger strategy is to control the space - be it home or office or any other space by providing television, telephony and internet through a single fiber. Surely, market- entry strategy for this will be similar to jio that is throwing up big discounts and range of promo offers to garner the market share. In country where, entertainment consumption habits are shifting from Channel/ hardware (TV)- based format to app- based or software-based format, JioGiga Fiber is going to pull hardest punch on its’ competitors.

New commerce platform: I feel that, RIL is going to be Amazon of India especially after reading this specific statement by Mr. Ambani in 41^st AGM – “As Reliance transitions to become a TECHNOLOGY PLATFORM COMPANY, we see our biggest growth opportunity in creating a hybrid, online-to-offline NEW COMMERCE PLATFORM.”  The grand strategy of connecting and synergizing the Reliance retail – Physical marketplace with digital platform of Jio for suppliers, merchants, distributors and consumers is going to be a massive growth booster for RIL. Company is going to leverage existing network of Reliance retail and its’ 35 crore customers base (this no. is stated in the speech) and add to this 21.5 crore Jio customers and target of achieving 5 crore through Giga fiber project – and now imagine if RIL can tap even fraction of this total number on its’ new commerce platform- what will be the scenario.  After Flipkart & then Amazon’s disruption in e-retail space in India, I believe this new commerce platform initiative of RIL is going to bring new wave of disruption.

 Golden decade of RIL ?:  When Mr. Ambani stated in 41^st AGM that “This has enabled Reliance to strategically reinvent itself as a Technology Platform Company”, it was crystal clear where the giant is heading. On the day of AGM (5^th July), RIL stock price closed negative. The initial fear behind this could be that investors couldn’t grasp & process properly the range of new initiatives announced & its’ impact on company’s valuation OR possibly investors are looking at start of new cycle of capital expenditure for these initiatives and so pushed down the stock. But since 6^th-July till 12^th-July RIL stock has moved up by around 12 %, so investors & analysts are still trying to grapple with the announcements’ impact on future valuation of RIL. If RIL manages to pull this off, then this is going to unlock huge value creation for investors, looking from long term – next one decade perspective. Generally, investors try to focus on ‘core competency’ of the firm as one of the many criteria for long term investment but for RIL core competency looks like their ability to predict the future and capability to implement it.

Ending Note: 

RIL is excellent at only two things;

First – Dreaming of monstrously over ambitious projects/initiatives

and

Second – Impeccable execution abilities in achieving the first - in record time.

In terms of above two qualities of RIL and the game RIL is going to play, it can be easily seen as a package of Google of India (for sheer data & content it will be handling) and Amazon of India. (Providing commerce platform & online to offline platform for merchants, farmers, manufacturers, customers and what not!)

How Google works - Book summary

Title:  How Google works

Author: Eric Schmidt & Jonathan Rosenberg

Publication: John Murray – Hachette UK company

First the disclaimer…I admire the Google as a company and many of its products, so my review of this book could be little biased! - And this is not a book review, it is book summary! – I’ll be sharing some highlights which are interesting to know from the book.

A book which is authored by former CEO (Eric) and Product head (Jonathan) and which gives you a fine inside into how Google grew from start-up to behemoth having at center very strong value system which two geeks named Lawrence Page and Surgey Brin inculcated from day one and remained that way…is definitely must read! ( I told you I am biased!)

Coming to this book – it has eight sub-themes or chapters which talks about how Google works.

Chaos is the way:  First few pages describe the feeling Eric had when he joined Google & saw complete chaos…in terms of there was NO defined workplace or cabins (Eric being the CEO- still was sharing his space initially)….seemed everyone was working on everything….lot of creative buzz all around the place. Interestingly, Eric says in the book there is order in chaos and chaos is the thing which is needed to create superb creative products with strong technical insights. So Google was a chaotic place to work in a good way!

Unique culture: I admit, I was awestruck when I read about culture, talent–hiring and decision making at Google. Many of the so called great companies always talk about their unique culture, having open-two way communication, decentralized decision making & equal –opportunity org., opportunities to voice out dissenting opinions even against top Mgt. & promoters etc. Well, you and I, we all know in most of the cases, exactly opposite of the above is true and that’s how it is! BUT in this book, authors share many real experiences where employees can openly disagree with founders or top mgt. in their regular famous TGIF open meetings on Fridays. At Google, lot of top Mgt. (including founders) spend a good amount of time in hiring the right talent (brilliant, passionate & creative with strong technical background) and that is the reason it is the PEOPLE which make Google different. The authors say Google always believe in hiring SMART CREATIVES – and who are these? They are very smart, creative, flexible, quick learners, exhibiting strong expertise in his or her area of interest, never look at the time when involved in their work of passion, self-directed & motivated and so on….

Decision making: The book nicely sums up the decision making process at Google and that is – User first. The majority of critical decisions are discussed and debated and employees are encouraged to dissent with valid points and then consensus is built and decision is taken. Many incidences authors quote in the book where instead of focusing on revenue or customers (companies) who are placing their ads with Google products, they focus on users. Right from the founders everyone is always thinking about the user first (that is the culture they built from the start) – all those who are using variety of Google products.

Note about authors:

1. Eric Schmidt – was CEO of Google Inc. from 2001 to 2011. When he joined in 2001 as a CEO, Google was still a start-up- founded in 1998 only. Eric being himself a veteran in the technology industry and worked with many established companies at top level joined Google when it was start-up, talks lot about Google as a company & its’ two founders.

2. Jonathan Rosenberg- again veteran joined Google in 2002 overseeing design & developments of products at Google.

Modern economics V/S Behavioral Economics : How decisions are made? - Short review of book 'Misbehaving'

Title: Misbehaving: The making of Behavioral Economics

Author: Richard Thaler

Publication: W. W. Norton & Company

 I understand that behavioral economics is still called 'emerging discipline' even after systematic development of this branch started at least five decades back. And this book takes you through that roller-coaster ride of emergence of Behavioral  Economics. 

Ever wonder what Noble Prize can do...well it made me read this book authored by Dr. Richard Thaler- Noble Prize winner of 2017 in economic sciences for his contribution to Behavioral Economics.

Coming to the short review:

Well, truly the author takes the reader through the journey of Behavioral Economics from an academician’s perspective. Book is divided in various time line as developments-controversies – conflicts arising from shaping of Behavioral Economics. 

What I loved about this book is (it can be perfect reason for other reader to hate this book!), it gives complete account of how the new branch developed in US–academia world. But I guess this very fact can make this book little boring for those who are not into academics or not much interested in academic perspective of development of this new branch.

Thaler’s talk about how he initially got lucky & bumped into the two superstars of the field namely; Amos Tversky & Daniel Kahneman gives goose bump. (These trio's initial discussions has led to emergence of many development in this field) 

The book nicely depicts the constant clash between modern economics - which believes that people are rational & they always take most rational decisions and try to optimize given resources, while behavioral economics - which theorizes & tries to empirically prove that human beings are human beings and not all of them are rational and most of time many of larger part of population take irrational decisions with thinking about most rational choices in real world setting.

Also unsurprising to see in the book, how the stalwarts of modern economics were at every step or discussion or at conference defending modern economics & made fun of behavioral economics. But with passage of time along with more evidences surfacing, many started taking note of behavioral angle in decision making. 

Book shares many stories of different walks of life over which there is an invisible print of  irrationality into decision making. Book also sheds insight into the functioning of academia world of US.

The most interesting part comes at the end, where author dwells into how UK govt. has started Behavioral Insight Unit (called The Behavioral Insights Team now)  to make governance more impactful.(Needless to say that author was also heavily engaged with the team)

Author also shares the future scope of this discipline in various new domain along with how policy making at country level can benefit from behavioral economics. It ends with highlighting how behavioral economics is rooted in behavioral science & psychology actually.

Last words...As UK govt. shows most promising application of behavioral economics can be at governance level in formulating more sensible policies and strategies as well as designing the delivery mechanism which factors into people's habit of irrational decision-making.

 If rightly done who knows outcomes can be profounding!