Review – The Blue Bottle Craft Of Coffee

The Blue Bottle Craft of Coffee: Growing, Roasting, and Drinking, with Recipes

by James Freeman, Caitlin Freeman, published 2012

It seems that coffee might best be appreciated by a mathematician when one considers how many various ways the factors of coffee production can be manipulated prior to it being poured into one’s cup. For example:

  1. Arabica or robusta species? Which varietal?
  2. Where was it grown? (Ethiopia, Kenya, Brazil, Hawai’i…) At what altitude? What were the weather and soil conditions during that crop?
  3. How was it processed? Dry or wet? Organic?
  4. Is it single-origin or a blend?
  5. How was it roasted? What temperature? How long? Starting and stopping moisture? Time to first crack? Second crack?
  6. How were the beans ground? Coarse? Fine? Hand grind or motorized?
  7. How was the coffee brewed? Pour-over? Espresso? French press? Cold brew?
  8. Black or with condiments? Whole milk or heavy cream? Butter? Sugar? Spices?

It may be that only true professionals can discern meaningful differences between one cup and the next when it comes to certain degrees of some of these variables, but nonetheless they’re there and on a gross basis they’re meaningful. Coffee from Ethiopia is different from coffee from Costa Rica. Pour-overs have different profiles than coffee that has been French pressed. Even the temperature of the water and the time of extraction matter within each brewing method.

Coffee is a global commodity, but the Freemans’ book makes it clear that coffee nonetheless defies commoditization for those looking for an individualized, craft experience. One can endlessly explore the world of coffee by twisting these knobs and pulling these levers.

Something about coffee seems delicate after reading this book. One grower profiled had 6,000 trees on their plantation which each yield only a pound of green coffee. A talented human harvester can clear about 2 pounds worth of finished coffee per hour from the trees. We’re not talking about shaking pounds of fruit with one bump like an orange tree here. And coffee goes stale quickly after roasting and even more speedily after grinding. With all the time and intermediate steps between planting and drinking, one could easily ruin the essential qualities of their coffee with simple mistiming or lack of coordination. Brew a minute too long, swirl the water in your pour over a little too fast, and something sublime is lost forever, replaced with tasteless mediocrity.

It is surely an art to do it well!

The discussion around organic certification on coffee also caused me to pause. Organic is not a perfect measure of quality or nutrition by any means when it comes to food, and organic farming practices have some of their own problems. But all else equal, we’d rather not ingest the pesticides if we can avoid it. Yet when it comes to coffee (and wine, “biodynamic”), I haven’t thought twice about insisting on organic sources. This is an odd oversight on my part because it’s probably even more important given that the act of extraction in coffee making virtually guarantees that residual chemicals end up fully dissolved in a readily-digestible concoction, but even more so because for most people coffee is a daily habit so you are being exposed constantly rather than periodically. Unfortunately, this is one place where the market isn’t keeping up. I think on average at my local coffee shop there is one organic offering for every ten or twelve types of beans presented.

James Freeman, the founder of Blue Bottle Coffee and author of the coffee sections, makes it clear that most people in America drink bad coffee each morning. Their sins are many and born of ignorance mostly, convenience secondly. They use automatic drip brewers, pre-ground (stale) coffee, unfiltered water, incorrect temperatures for brewing, unkindly ratios of water to coffee grounds and, worst of all cases, “pod coffee” (K-cups, Nespresso, and so on).

To take back the pride of good coffee, to create one’s own coffee ritual and to further develop the art of the craft, he recommends a basic setup for the novice:

  • electronic gram scale
  • thermocouple thermometer
  • conical burr grinder
  • swan-neck kettle
  • single-cup pour-over dripper + filters

There are many preparation methods detailed in the book but I was surprised to learn that he recommended the simple pour-over as the first and best technique to master. He also recommends making coffee one cup at a time– a difficult task for a family man trying to mass-produce breakfast! Most interestingly, while he believes you can have a delicious cup of coffee with any kind of bean and roast that has been properly farmed and processed, he recommends single-origin light roasts, black, for the cleanest presentation in the pour-over method.

It’s easy for me when reading a book like this to focus on the “recipe” and ignore the “principles”. Freeman offers a number of rules of thumb and general guidelines but the key idea is personal experimentation and discovery within extreme bounds. Water that is too cold or too hot is just never going to produce good coffee, but water between 205F and 190F, to personal preference, will produce personally-satisfying coffee. It is not about what is objectively best but what is subjectively delicious to you.

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Tidying Up Our Library

Today I tried to sort through a number of reading lists I keep on Amazon.com in order to find a few new things to read.

I failed. Quickly.

A minute amount of arithmetic can show us why. If I dropped everything else of interest to me and developed greater discipline than I’ve exhibited in the last several years and devoted all of my free time each day to reading, I might, possibly, get through all of the titles I’ve accumulated in my lists in about… five years.

Five years straight of regimented reading. And of course these titles were accumulated over a period of about five years, so by the time I finished, I’d have my reading for the next five years ready to go. An endless fight, I could make my way through the stacks until life itself exceeds me and I succumb to my war wounds, surrounded by loved ones and my unread materiel.

Trying to sort these potential odysseys, I became overwhelmed and soon the books sorted me. How did I get here? What am I really trying to do? What is the point?

Every book I’ve encountered and subscribed to my lists (there are 22, by the way, starting with “American History”, ranging through “Farming & Ecology” and ending with “Social Science”) represents a hope for mastery and wisdom. Each represents one human being’s life work, in many cases, or at least a component piece of a corpus representing everything they’ve learned about a specific area of human inquiry they’ve devoted their energies and attentions to understanding.

So I grabbed them by the bushel, the box, the bundle, and stuffed them into 22 unique intellectual genuses for my future edification. Are you seeing the problem here?

This is intellectual hoarding on an epic scale. And each hope hides a dying regret, that I didn’t learn all of this sooner or at some other time in my life.

There may have been many opportunities to learn everything there is to know about Ancient Roman social and political and philosophical history; of EO Wilson’s sociobiology and studies of ants; of comparative studies in global religious traditions and the historical implications for host societies; of the supreme importance of mycelia (read: mushrooms) for soil health in one’s home garden or the world at large; of what the Founding Fathers really meant by the words they wrote in the Constitution and why the US really is a unique and special polity on the world stage.

But I didn’t. And I have to learn to accept that fact and let all these possible, potential, unrealized versions of me go. I know 80% more about philosophy than the average yokel, but I will never truly know Nietzsche. I made it this far without such arcane wisdom and I’ll have to see if I can make it a bit further.

It’s hard for me to let go of all the time I spent finding this stuff, though. In some weird combination of the sunk cost fallacy and the labor theory of value, it seems like because I spent all this time and had all these dreams it’d be a shame to just, hit the delete key, and watch these lists get disappeared out of some internet memory bank.

Instead of wholesale, scorched earth reset, I am considering utilizing Marie Kondo’s “spark joy” principle. I will scan my list and imagine, briefly, pulling each of these titles out of a freshly delivered Amazon.com box and holding it in my hands, feeling its weight and staring at the cover in person for the first time. How do I imagine myself feeling in that moment?

If I am ready to forget whatever it was I was doing the split second before the package arrived because I am too eager to sit down and begin reading, this title is capable of “sparking joy” for me. It touches something of my true essence, my actionable values, and a case can be made for keeping it on a shortlist for purchase if not ordering it immediately.

Everything else is getting torched. If it doesn’t spark joy for me now, it might spark joy for me never. It would be wasteful to maintain the delusion that I’m going to get to it one day and worse still to make the mistake of actually buying it. Then, Amazon’s inventory investment problems become my own. And I have no retail platform!

Some might suggest that there is value in maintaining a personal library. Here’s a recent picture of mine:

This is not every book I’ve ever owned nor every book I currently own. Sadly, I have more books than this and in more places than this. Many have been read. Some never will be. If the idea that I’ll eventually read all of these books is insane, the notion that some are worth keeping for re-reading or reference is marginally less connected to reality. Who has time for this? I don’t.

One of my greatest joys in reading has been discovering books and chasing down my own rabbit holes. Maintaining a library says something like, “One day, someone in my family or one of my friends or someone who cares about me is going to be really excited to chase down all my old rabbit holes like I did.” That day isn’t coming, but one in which your loved ones, a friend or someone who cared about you (maybe because they’re being paid to haul away your garbage and remains) tosses your books in the dump, is. It’s vanity to collect books as if it represents some important intellectual legacy you’re preserving for others.

That being said, maybe as part of family governance there are a select few titles that the patriarch (or matriarch) insists family members become familiar with as part of a shared family intellectual culture. That seems reasonable. But in the photo above, such selections would probably be able to fit on an individual division of one shelf at maximum.

Besides losing some nice wall art, you would gain some space if you stopped having a library and copious lists of books you’ll never actually read. You might also gain some freedom and satisfaction. What does it do to your soul to carry all that stuff you’ll never do and all the knowledge you’ll never have stuck in books you’ll never read, to carry it around in the back of your mind, day after day? What limitations do you set on yourself here and now when you spend any amount of time punishing yourself for what you aren’t yet but might be one day?

So, just let it go. If it’s important, if it’s you, it’ll come back to you one day when you go looking for it.

Review – Corporate Strategy

Corporate Strategy: Tools for Analysis and Decision-Making

by Phanish Puranam, Bart Vanneste, published 2016

What is corporate strategy and how is it any different from business strategy? That was actually a distinction I hadn’t made in my own mind when I picked this title up. I was generally interested in exploring “strategy” in an economic or business competition sense and this book was one of many I selected for further research. It was a happy accident then to realize there is a difference and this book is all about explaining what it is and why it’s different.

Business strategy aims at creating competitive advantage in a firm-against-firm struggle within a given industry. It flows outward from customer behavior through organizational structure and management practice to policies and processes surrounding marketing, sales, production, distribution and customer service.

Corporate strategy aims at realizing synergies from the joint ownership of different businesses. Synergies can be realized between businesses competing in the same industry but with common ownership (and perhaps diverse geographic territories), the case of a “corporate HQ” utilizing economies of scale in back-end or administrative functions to lower their cost or raise their quality across the individual customer-facing businesses. Synergies can also be realized between businesses operating in distinct industries but where coordination between actors in these industries allows for new products or services to be bundled, consider a bank and an insurance company owned by one corporate parent which can then offer a full range of financial services to customers.

One interesting takeaway from the book is that all public equity investors who do not have 100% of their investments in a single company (ie, they own a portfolio of stocks) are engaged in corporate strategy. However, as the book advises, passive investors are not able to realize synergies which those in control of these businesses can through exerting influence over their management. So, a passive equity investor could have an insight about the unique value of owning a complimentary basket of businesses representing corporate advantage, but they do not have the means to act upon it unless they are able to successfully agitate for M&A activity or have enough resources to get voting control over the companies in which they can sway management to extract the synergies they’ve spotted.

Another concept that was interesting to me was the irony that by bringing businesses under common ownership, a corporation destroys its own best benchmark for valuation (ie, the individual market prices of each business) and thus it is trapped in a perpetual game of trying to evaluate whether it’s coordination of economic activity within the corporation is synergistic and creating value, or wasteful and destroying it.

Warren Buffett as a conglomerator par excellence is an interesting case because, at least nominally, he does not provide managerial oversight to operations of the businesses he owns and has never claimed he has purchased a business for synergistic reasons for corporate strategy. Rather, he purchases businesses ONLY because he considers them to be available on a bargain basis, that is, he thinks they are available for less than their intrinsic value.

The entire point of corporate strategy, according to the book, is to be able to pay market or “fair” prices for assets and businesses, but still realize a profit from owning them, because of the ability to manage or exploit them differently under a joint ownership structure. So, Buffett is NOT a corporate strategist, although he is a really great investor.

And if you can realize synergies AND buy at bargain prices (AND apply leverage safely…) then you are really cooking with gas!

One of the great ironies of the (public) business world is that many managers (they are hardly ever significant shareholders themselves) think they can spot synergies all over the place, which either they or their investment bankers use to rationalize their acquisition activity. But the data demonstrate that few synergies ever appear to be realized– acquiring companies usually overpay, their stock falls on the announcement of an acquisition and the target company’s stock rises. Further, these acquisitions are often followed years later by goodwill writeoffs or divestitures of the previously acquired business or assets.

On average, a corporate parent that divests a business increases shareholder value.

In fact, one of the strategic suggestions of the authors is the always be on the look out for someone who is a better owner of a business or asset than you (ie, willing to pay you more than it’s worth to you to continue owning it) and selling things seems to be one of the most reliable ways for corporate strategists to create corporate advantage. It’s a pity, then, that most corporate strategists are buyers, not sellers!

If some other corporate parent has even stronger synergies with a business than you do, you should consider divesting.

Divesting when you can, and not when you have to is usually preferable.

Imagine that, starting today, the two businesses would be moved into separate ownership and would be operated completely independently, with no communication or exchange of any kind between the two. How would the value of the businesses be effected?

If one thinks one is smart enough to beat the odds, the authors suggest four places to look for synergies from joint ownership and operations for corporate strategists:

  1. Consolidation, creating value by rationalization across similar resources from similar value chain activities by eliminating redundancies, affects mostly costs and invested capital
  2. Combination, creating value by pooling similar resources from similar value chain activities, such as combining purchasing to obtain volume discounts or acquiring a competitor then raising prices for customers, impacts either costs or revenues
  3. Customization, creating value by co-specializing dissimilar resources in order to create greater joint value, results in improved value in production or consumption and involves modification of resources, the transfer of best practices can create unique value
  4. Connection, generates value by simply pooling the output of dissimilar value chain activities, for example customers may value being able to buy a bundle of different products and services together, the product development of one business is being connected to the distribution channel of another

Here are some other major strategy risks that are common:

One common negative synergy is brand dilution, ie, does the brand apply? Another is complexity. Another is market rivalry, this is a significant concern in the advertising industry, where when two firms who serve rivals merge, the chances of keeping both their clients is low.

Governance costs act as taxes that eat into the potential benefits from synergies when they are attempted to be extracted. [ie, the price you pay to operate an acquired business effectively.]

When an autonomous business becomes a division within another, the incentives of the owner and managers are necessarily diluted.

Synergies likely to generate significant transaction costs are less likely to be successfully realized in arms length relationships between independent firms than under common ownership.

I particularly appreciated the discussion about the corporate advantage that can be achieved through thoughtful design of the organization and its management.

One should be able to read the corporate strategy of a company in its organization chart: what kinds of activities does the top management feel are essential to integrate?

While all organizational structures represent a unique combination, there are three “pure form” ways to structure the corporation and its management structure: by activity, by output, by user/customer.

The authors recommend that corporate strategists “Think about the multi-business corporation as a collection of value chain activities” and look for synergies accordingly. But, being economic entities, there are necessary tradeoffs to beware of with each choice:

Grouping similar activities together emphasizes economies of scale at the expense of economies of scope, whereas grouping different activities together does exactly the opposite.

Every grouping arrangement emphasizes certain interactions but excludes others, which show up as opportunity costs and bottlenecks.

Further, if the innovation literature and hundreds of years of business history haven’t beat it into your head yet, things change. That means that the “right” structure (the synergistic one) is likely to change over time. “No structure is permanent.” Corporate strategists should always be considering the possibility that the ideal economic structure for managing the company has changed in reflection of new competitive dynamics, customer tastes and habits or advancements in technology, culture and society. A good rule of thumb might be that the appropriateness of the corporate structure needs to be reconsidered every time a major acquisition or divestiture occurs.

There were two other nuggets of corporate strategy wisdom that stood out to me. One was that most multi-business firms have capital allocation decision-making on auto-pilot. Either every request gets granted, or every request gets denied, or every business gets to keep whatever it generates. The corporate strategist can grab some low-hanging fruit by being thoughtful about capital allocation decisions within the portfolio and providing a critical voice about whether capital should be redistributed amongst divisions or even outside the company (ie, dividend or acquisition activity).

The other was in the author’s description of the typical M&A process (which includes not just execution of the acquisition transaction but also successful completion of the post-merger integration process). The most overlooked, and final, step in the process is Evaluation, which “refers to a post-transaction review of what went right and wrong” and analyzes the economic impact of the transaction on the entire firm. Were synergies realized? In the amounts predicted? Did costs materialize that were surprising? Did any other kind of disruption or distraction that was not anticipated earlier occur during the course of the merger? From my personal experience, it is difficult for management teams to take the time to look into the rear-view mirror like this, and even harder for them to be honest about what they see!!

Notes – Corporate Strategy

The following are my unedited notes from my reading of Corporate Strategy:

Corporate strategy versus business strategy

Corporate advantage versus competitive advantage

Two ways of increasing competitive advantage:

1.) raise the price customers are willing to pay

2.) lower the price suppliers are willing to sell for

Maximizing corporate advantage may or may not be consistent with maximizing the competitive advantage of each individual business

Some businesses could give up competitive advantage in their business in order to enhance the competitive advantage of other businesses in the portfolio

Corporate strategy matters at least as much as the analysis of industry competition (implication for passive investment analysis)

A natural, minimal benchmark for a corporate strategist is a passive investor

Synergy is therefore the means through which corporate advantage is created relative to a typical investor who can select the same portfolio of investments

Portfolio assembly can be a corporate advantage in cases of private/restricted capital markets

By coming into existence, the multi-business firm in effect destroys its own best benchmark

The super-rich may treat their business group as their own mutual fund

Corporate advantage is defined in terms of jointly owning businesses and synergies in terms of jointly operating them.

While an investor could create corporate advantage, an investor cannot extract synergies.

For a corporate strategist to create corporate advantage over what an investor can achieve in efficient capital markets, there must at least be some form of synergy between two businesses in the portfolio

To find synergies, construct a value chain for each business/division and look for opportunities to coordinate or economize activity

Forms of synergy

  1. Consolidation, creating value by rationalization across similar resources from similar value chain activities by eliminating redundancies, affects mostly costs and invested capital
  2. Combination, creating value by pooling similar resources from similar value chain activities, such as combining purchasing to obtain volume discounts or acquiring a competitor then raising prices for customers, impacts either costs or revenues
  3. Customization, creating value by co-specializing dissimilar resources in order to create greater joint value, results in improved value in production or consumption and involves modification of resources, the transfer of best practices can create unique value
  4. Connection, generates value by simply pooling the output of dissimilar value chain activities, for example customers may value being able to buy a bundle of different products and services together, the product development of one business is being connected to the distribution channel of another

One common negative synergy is brand dilution, ie, does the brand apply? Another is complexity. Another is market rivalry, this is a significant concern in the advertising industry, where when two firms who serve rivals merge, the chances of keeping both their clients is low

Governance costs act as taxes that eat into the potential benefits from synergies when they are attempted to be extracted

When an autonomous business becomes a division within another, the incentives of the owner and managers are necessarily diluted

Synergies are likely to generate significant transaction costs are less likely to be successfully realized in arms length relationships between independent firms than under common ownership

A management services firm is a kind of non-equity alliance

The more mature and efficient the capital markets in which a company operates, the greater the pressure on the company to engage in diversification primarily on the basis of potential synergies between existing and new businesses

The CEO should be spending the shareholders’ money on entry into new businesses only to extract value that the shareholder could not by investing directly in such a business on her own

In the absence of bargains, passing the synergy test is necessary but not sufficient to pass the diversification test

If some other corporate parent has even stronger synergies with a business than you do, you should consider divesting

An active policy of looking for divestiture opportunities is sensible

On average, a corporate parent that divests a business increases shareholder value

Imagine that, starting today, the two businesses would be moved into separate ownership and would be operated completely independently, with no communication or exchange of any kind between the two. How would the value of the businesses be effected?

Divesting when you can, and not when you have to is usually preferable

Outsourcing often carries significant transaction costs

Think about the multi-business corporation as a collection of value chain activities

One should be able to read the corporate strategy of a company in its organization chart: what kinds of activities does the top management feel are essential to integrate?

Pure forms of organization: by activity, by output, by user/customer

Grouping similar activities together emphasizes economies of scale at the expense of economies of scope, whereas grouping different activities together does exactly the opposite

Every grouping arrangement emphasizes certain interactions but excludes others, which show up as opportunity costs and bottlenecks

No structure is permanent

Don’t forget about how to integrate activities while you’re thinking about ways to partition them up

Corporate management functions:

  • Treasury
  • Risk management
  • Taxation
  • Financial reporting
  • Company secretary
  • Legal counsel
  • Government relations
  • Investor relations

The goal of resource allocation in the portfolio is thus to push businesses further away from the origin toward the top and right, away from the investment threshold (pg 212)

One low hanging fruit for multi-business firms in terms of corporate strategy is to actually give thoughtful consideration to capital allocation decisions within the portfolio

In the M&A and Post-merger Integration process, Evaluation refers to a post-transaction review of what went right and wrong

On average, acquirers do not benefit (in terms of market cap) from an acquisition; most target shareholders benefit from an acquisition

The ICSA Company Secretary’s Handbook, resource for corporate management

More Thoughts On Silver Spoon Kids

The following are more thoughts and notes from our reading of Silver Spoon Kids.

When you die, you will leave behind your money but most importantly your values; which will be most important to your children and their quality of life? It seems a major mistake many financially successful families make is they spend all their time and energy trying to provide the first resource and give little if any attention to the latter. As the parent of one friend quipped about the inheritance he planned to leave behind, “I’ve done my part.” And as my friend observed, “What does that mean, and what are we supposed to do about it?”

According to the authors, there are five primary ingredients to consider if one endeavors to raise responsible, emotionally healthy affluent children:

  1. demystify money
  2. understand fundamental psychological principles of human development
  3. clarify concept of personal values (parent)
  4. parents’ relationship with money
  5. money messages that are modeled for children

Money itself is not “the problem”, but rather the problem is money unaccompanied by values.

A generational problem that faces families whether they are financially successful or not, but which is especially easy to overlook as important for the affluent, is that all parents face different sets of challenges; strategies that may have been appropriate (with money) in one set of circumstances may be damaging when affluence is a factor. So it isn’t enough for parents who struggled to make money to leave their kids with the same attitudes and perspectives they had before they had money, and it also isn’t enough to assume that just doing the opposite, or worse, scolding, terrifying or otherwise being neglectful towards children with regards to money, is going to address the issue.

Passing on values from parent to child requires repeated interactions over many years and some families don’t have (or make) time for this repetition. If the getting of money is demonstrated to be a more important value for a family than the coming together to talk about its meaning, guess what the children learn from that? Guess what children learn from any parent who is not present? Answer: whatever the hell they want, and nothing good. You can not parent from a distance.

Engaging in real conversations with real people (like their parents) is how kids mature emotionally and become socialized. It isn’t realistic to expect children to become reasonable and responsible about money without an example of reasonable, responsible attitudes about money being modeled for them that they can interact with. Affluent or otherwise, kids need their parents to be their for them to grow up right. This is a fundamental principle of child development.

Consistency of routines and experiences is a big part of transmitting values and socializing children effectively, ie, taking the same family vacation to the same place each summer (depth rather than breadth). So it’s less important WHERE you vacation or HOW you vacation but rather THAT you vacation, and that you do that over and over again so children can count on it and grow through the experience.

One goofy example from the book that stood out to me as a mistake not to make in terms of prioritizing values: a well-to-do family found their “dream house” early on in the family formation process. In order to afford this “dream house”, mom had to go back to work and earn an income outside the home. Somehow she was able to make enough to help make the mortgage AND to hire an au pair to help look after the kids. The result: a beautiful home empty of a real family to live inside of it. This is putting the cart before the horse. The author’s didn’t say this but that is my read on the situation.

Another point raised in the book is that lecturing kids about money isn’t effective. Besides the fact that no one likes being lectured to and few tune-in for such treatment, the simple fact is that the transmission of values requires repeated interactions with multiple nuances on the same subject for the knowledge of the observer to become intuitive. Kids take their cues from thousands of interactions with you, from listening to what you say and observing what you do in a wide variety of situations. It is the furthest thing from a “one and done” Birds & Bees-type conversation to get habits, disciplines and attitudes about money across.

In terms of understanding child development, one of the truly crucial discoveries has been the importance of children forming a secure attachment with attachment figures while they’re young. Without this bond, children tend to experience all sorts of emotional difficulties as they go through different developmental stages. Dysfunctional relationships about money are just one thing. You can solve all kinds or problems in your family, money and more, simply by consciously creating the conditions for secure attachments to form between children and parents.

Many affluent parents fret about their children being able to navigate the risks of the wider world. The key here is to help children develop the capacity for self-regulation, and self-regulation is rooted in secure attachments to parents. Children who have developed the capacity for self-regulation tend to exhibit increased emotional resilience when dealing with adversity and tend to do well in social relationships as they grow older.

Secure attachments require empathic communication– helping children to feel seen, heard and understood. Affluent parents should be investing in RIE classes with their infants and young children and NVC seminars with their adolescents and teenagers, they have the means and time to do so and it will pay dividends throughout their life.

An interesting developmental concept shared in the book was Erik Erikson’s Eight Stages of Child Development, which suggests there are key developmental goals for each major stage of a person’s life:

  1. Birth to 1yr; trust
  2. 2-3yrs; autonomy
  3. 4-5yrs; initiative
  4. 6yrs-puberty; industry
  5. adolescence; identity
  6. early adulthood; intimacy
  7. middle adulthood; generativity
  8. later adulthood; integrity

The first stage, trust, is about developing secure attachment with caregivers. The second stage, autonomy, is the process through which the child comes to understand their existence and capability for survival independent of their parents, primarily the mother. The third stage, initiative, is where the child becomes increasingly self-directed in their learning and play, making their own decisions about how they want to spend their time and what experiences they want to have. The fourth stage, industry, is a time where the child becomes conscious of their ability to be productive and to make a helpful contribution to their social circle (their family). The fifth stage, identity, is when the child is entering personhood and begins to contemplate who they are, what their values are and what meaning they want their life to have. The sixth stage, intimacy, is the necessary precursor to repeating the genetic cycle through pair bonding and family formation as the person learns to grow close enough to another person to form the intimacy necessary for procreation, but also to develop tight enough bonds with others in general that they can become secure within society. The seventh stage, generativity, represents not only procreation and the populating of a new generation but also the peaking productive energies of adults at home in terms of their creativity, work output and intellectual and social contributions to others. The eighth and final stage, integrity, is a reflective period in which most of us will hopefully be able to look back on our lives and feel content that we lived our life according to our most cherished and esteemed values. For some who realize they have been living a lie or not living up to their own expectations, this can be a very painful time indeed, and it is particularly so when surrounded by younger family members who are attempting to form secure bonds, discover their identity, attain initiative and engage in industry or sort out their own identity, when the model before them is a big, fat hypocrite or pathetic loser! Think ahead and don’t become a person filled with remorse by the eighth stage, life catches up to you.

Thinking back to the example of the family that prioritized their home ownership dream over having mom home with the kids, this quote stood out to me:

In the best of all possible worlds, at least one parent is financially able to be a full-time mother or father during the first year.

Of course, the authors were quick to qualify this right afterwards by assuring the reader that, while ideal, you can still raise a good family without this (yeah… but it’s not ideal, which is the whole point). But what I think is most important about this concept is that the ability of family to actually be together is itself a huge Standard of Living value that most people overlook, especially people seeking or experiencing affluence. It’s like they’ve got the fancy house, the nice car, the swanky clothes, the expensive eateries and the ‘gram-able vacays, but they don’t think to spend their affluence escaping that trap of impoverished families mentioned earlier in the book: the inability to afford the time to be together. What would the world look like if more affluent families put that value first and foremost in their family planning strategy?

Why affluent parents should avoid protecting their children from life’s miseries:

Frustration is inherent in any learning process, affluent families should not try to shield their children from this; avoid using affluence to take away the child’s struggle. Children who are not permitted to struggle and succeed often develop a sense of inferiority.

Another key piece of advice I have almost never heard any affluent family engage in purposefully (although all kinds of families will get here in an unintended shouting match or something like that!):

Tell your child about some of your mistakes and some of your failures.

Why? Because it’s valuable for affluent children to know that even their parents, who mostly succeeded in life, screwed some stuff up along the way and still arrived where they did. It takes the pressure off and makes it more realistic to consider “being human” as an option.

In describing personal attitudes about money, the authors described our money relationships existing along three dimensions: acquisition, use and management. Every person has a unique combination of attitudes regarding these three factors, and each person can be either overly conservative or overly risky in regard to each (or skewing toward one of the extremes).

When thinking about the second dimension, use, an important question to consider is:

Does your family have a sense of what is “enough” and why?

For people who think they never have enough money to be happy, maybe what they really are experiencing is a deficit of values, or a failure to align with them in terms of their choices:

People who live in accordance with their values enjoy happy lives; children who live in accordance with their values enjoy an identity.

The authors describe the phenomenon of children who are fully absorbed with their own kind of “Keeping Up With The Joneses” competition for material possessions and status. I refer to this as “social metaphysics” and it seems from the author’s experience that it occurs when children do not have their own values to anchor their observations and experiences in. As a result, they end up referencing other people rather than themselves when trying to arrive at judgments.

And back to the modeling idea:

Our behavior around money tells our children more about our money values than anything we say. Our children may accept our money values or they may reject them, but we guarantee you that they won’t ignore them.

Besides being a hypocrite, you can also make the mistake of saying NOTHING about money with your kids. But that’s a big mistake, too:

Giving money the silent treatment not only robs your kids of the skills needed to manage it, but it can also result in emotionally unhealthy attitudes toward it.

As one estate planner put it “no device that I can draft will make up for lessons that weren’t learned as a child”.

To help your children develop their own consciousness about money, employ reflective discussions with your child which involve asking questions about what, when, why and how to help them form an opinion and reflect on their own wishes and ideas, the foundation of abstract thinking.

Age-appropriate discussions about money

Here are some specific strategies the authors recommend for discussing money with children at various ages/developmental stages:

Ages five and under; we strongly believe you should limit your preschool child’s exposure to television advertising because of her natural “wanting” tendency; what preschoolers can and should learn is the concept of saving, around age three, use the exercise of depositing a fixed sum in a jar each day before allowing it to be spent at a future time, establishes the connection between giving money and getting something return after waiting for money to accumulate; also can discuss the difference between “need” and “want” and illustrate through concrete examples such as food for dinner versus ice cream for dessert

Six to twelve years old; it’s good to start kids on allowances earlier rather than later, let the kids make budgeting mistakes when they’re less likely to engage in emotional battles over insufficient funds; kids as young as eight can be taught to budget and select from among alternatives if you take the time to explain the process; when talking about money, talk in terms of choices and consequences (tradeoffs, also, basic economic concepts?); open a savings account at a local bank and include the child in the process, discussing how it works and what it’s for

Thirteen to eighteen years old; address issues such as the cost of a given item versus its value to the individual, what constitutes an “overpriced” product or service and the idea of setting and adhering to a reasonable budget; giving a teenager and unrestricted credit card simply teaches them to spend; they should be encouraged to budget for longer periods of time, for the entire month or even a school quarter or semester; involve your children in the research process behind a major purchase, let the teenager evaluate product quality and price via internet research and make a recommendation

And here is a list of helpful “Money Dos” for those not inclined toward negativity and things to avoid:

  • do be honest
  • do connect the concept of money with that of responsibility
  • do help them understand that there are limits on spending
  • do acknowledge your child’s negative feelings about money and wealth
  • do treat their questions with respect

Allowance is a hot topic amongst the affluent and some are skeptical because it seems like “socialism” or a “handout”, but an allowance only has a negative effect if parents refrain from dispensing values along with the money according to the author’s research. Instead, view an allowance as the child’s rightful opportunity to share an appropriate portion of the family’s resources. As a more global concept, perhaps families should have a Family Bill of Rights as a family governance tool, and allowance and other money/wealth rights and responsibilities should be outlined in this document. Ie, “As a member of the X clan, you have the RIGHT to Y, but also the RESPONSIBILITY to provide/do Z.” This helps build a distinct family culture around money and other important family values and norms. If your child is going to become a responsible adult, he needs to know that privileges and responsibilities will be inextricably linked throughout his life. As a member of the family, your child should share in both the privileges and responsibilities that go with his membership.

Determining what’s appropriate (as far as size of allowance and what it can be spent on) is a process you should share with your child; by communicating allowance parameters you are communicating a rationale that contains your values. You’re also treating your child as a responsible, serious person regarding money, which is how you want them to think of themselves as they deal with it.

If you establish an allowance or some other means of financial support, stick to it. Rescuing sends the worst money message possible; the link between hard work and additional pay is a good one, as it demonstrates that you are the one who can save yourself. If your kids get stuck in a money hole, offer them ways they can go above and beyond to earn additional resources to bail themselves out. Create a list of special chores with a specific dollar amount attached to each; don’t keep this list a secret. But don’t turn money into a game. If you use money to control your child’s behavior, you will raise an adult who is controlled by money.

Later in the book, the authors spend some time talking about the importance of diversity and learning to appreciate and accept (it is implied) people without affluence. They say, “we must learn to help our children value people for their character, who they are, the obstacles they have surmounted and what they have accomplished with their lives”. I think the intent was sincere here but I can imagine your average progressive becoming enraged with this reasoning– what about people who don’t have much character, who haven’t managed to surmount their obstacles because they’re too big, onerous or unfair, or who otherwise have simply been stomped into the ground in life and can’t keep up? How is this not a recipe for failing to value those who have failed?

However, I really liked their take on the importance of inculcating the value of philanthropy, because I think they did a good job of connecting the developmental values of philanthropic activity to the patterns mentioned earlier in the book. Instead of just making some lame moral argument that you’re a bad or incomplete affluent person without having a conscience that goes beyond yourself (smuggled premise), they made the logical, self-interested argument that the thought processes and actions required in philanthropic activity are conducive to building genuine identity, self-esteem and concrete and realistic notions about wealth. Here are some quotes:

We are deliberately not using the word charity, but philanthropy, a desire to help mankind, encompasses all forms of activity and endeavors that help make the world a better place in which to live.

Philanthropy helps build a sense of accomplishment — “I’m helping others” — while counteracting the sense of superiority or privilege that can inhibit industry.

Assisting others confers a sense of mastery over life, by giving of themselves and their time, children find a satisfying answer to the question “Who am I without my family’s money?” Equally important, philanthropy provides teenagers with an activity that can be shared with the entire family.

Philanthropy demonstrates that they are not just the recipient of giving but have the capacity for giving as well

Philanthropic endeavors contradict this notion of a meaningless existence.

That really got me re-thinking the subject and considering how to weave it into our own family tapestry on this topic.

And they suggest philanthropic behavior can begin young, and should:

Writing a check to charity is too abstract a concept for a four or five-year-old. Young children have difficulty dealing with abstractions and need concrete experiences.

Speaking of philanthropy, what can make the world a better place than screwing over lenders, divorcees and their grasping lawyers? That is one reason I hadn’t fully considered for setting up a trust to protect family assets even if your affluence isn’t “substantial”:

One valuable aspect of putting money for children in a trust that is often overlooked is that it doesn’t just help protect the child from the money, but it protects the money from creditors, bankruptcy court and ex spouses in divorce proceedings.

No idea how timely this advice is as the book was written in 2002 and things may have changed, but one thing I’ve noticed about estate planning is that by nature, tax rates change but the rules and structures of long-term oriented tax avoidance vehicles like this rarely seem to do so in tandem.

Questions to ask yourself when forming a trust:

  • for what purposes would you be distributing money to your kids if you were doing it yourself?
  • what would you like to see your children and grandchildren do?
  • what are you afraid might happen to you?
  • what might they do with the money that would disappoint you?

Like the comments about an allowance, the authors have a word of warning about thinking that a “trust fund kid” must necessarily be spoiled:

Affluence, if handled properly, allow your child the opportunity to become anything they want. if you raise a child with a strong work ethic and a sense of responsibility, she will want to do the best she can do no matter what career path is taken or how much is in the trust fund.

Trust funds actually seem to serve as an incentive for children who are entrepreneurial but might be a disincentive for children who work as employees

And the final parting shot in the book as the authors look forward toward the social horizon:

It is going to become increasingly vital for us to find money heroes and communicate their stories to our children.

…because our kids are increasingly surrounded by easy access to impressions of bad actors. Facebook was 2 years away when this book was published but they saw the trend nonetheless through the insipid example of TV and movies.

Review – Silver Spoon Kids

Silver Spoon Kids: How Successful Parents Raise Responsible Children

by Eileen Gallo, Jon Gallo, published 2002

Growing up, I’ve personally witnessed conflicted family dynamics surrounding money. My parents are “successful” as the term connotes in this book, and their goal for their children (myself and siblings) was to create plans and structure for sharing their success with them while trying to avoid the risk of ruining our motivation, realism and personal attitudes. To summarize it in a pithy way, it is the quest to find a way for family wealth to “Have an impact, without an impact.” Somehow, we were to all benefit from family wealth while living as if it didn’t exist.

I’d say it’s been hit or miss, so far. All of their kids turned out morally in such a way that the average friend, neighbor or community member would think to refer to them as “good people” (if I may be so bold as a member of the sect!) But struggles or lack thereof with personal identity, sense of purpose, motivation, etc. vary from person to person and area to area. And at present, a minority of the children are in any position to know what to do with their parents’ wealth in the event of their demise. We might just chalk this up to genes and the randomness of life, but Silver Spoon Kids offers some child development background and family socialization dynamics that provide evidence these outcomes are anything but purely random.

While the authors (a husband and wife duo in the fields of estate planning and family therapy, definitely toll collectors on the highway of family misery built by poor planning) offer a summary of 4 major family money practices they consider essential for parents to master to inculcate responsibility in the second generation, I’d summarize my biggest takeaway from the book in a single sentence as follows:

When it comes to transmitting family values to children, especially concerning money, there is no substitute for parents investing their own time and attention in the relationship and modeling the values themselves for their children.

Most of the cringeworthy examples of “what not to do with kids and money” cited in the book are a result of some kind of avoidance of this elementary wisdom. Either the parents think they can get away with not being there for their kids, or they think the kids won’t notice when they say one thing and do another. It seems that good parenting on the topic of money is identical to good parenting on any other topic. That stands to good reason because child development is not rooted in “things” but in human evolutionary social biology!

So that’s my one-sentence elevator pitch on what this book is about. But here is the 4 point summary of essential practices the authors share at the end of the book:

  1. Understand the theoretical underpinnings; learn about normal stages and behaviors in child development and let this awareness inform your approach to discussing money with your children
  2. Live your values; to live your values, you must first know them, so take time to articulate what is important to you about money and why and make sure it doesn’t remain a secret to your offspring
  3. Teach your child about money through word and deed; don’t be a hypocrite, don’t be silent and don’t expect your kids to just magically arrive at the same conclusions and habits about money (if you think they’re good!) that you have without actively engaging them in the topic in age-appropriate ways
  4. Raise a giver rather than a getter; help your children understand that money comes and goes and there are important aspects to where it goes beyond just where it comes from; emphasize the ways in which money can make all people better off and give your children opportunities to find meaning in being a resource for others

Is this book of interest even if you don’t expect to be wealthy? Yes, because you can still spoil your kids without affluence. Again, the reason is because child development and human social dynamics are a constant of human nature rooted in evolutionary biology, rather than dependent upon material “things” coloring each person’s individual circumstances. Here’s an instructive quote I underlined in the book that describes what’s going on:

Can your children develop a secure attachment if you are with them for only limited periods of time? Interestingly, this same problem is faced by many low-income families, especially those with a single parent.

Yes, interesting indeed. Most of the symptomatic ills of the lower-classes are connected to the notion of parents who are over-taxed versus their available resources (time, money, health, etc.) But affluent families can create the same symptoms in their children by behaving the same way struggling lower class families behave– spending more time at work than at home, expecting children to raise themselves, neglecting to share values (or healthy values) with their kids and so on.

One helpful exercise in the book for getting a grip on family culture surrounding wealth is the development of a “Money Narrative”. It involves creating a short story about one’s early and personal family experiences surrounding money after reflecting on questions such as:

  • What is your earliest money memory (ie, the first important purchase you made)?
  • What did you learn from your father/mother about money?
  • What are some of your family stories about money (ie, the time grandpa was really cheap, or your aunt made a ridiculous purchase)?
  • What kind of financial education did you receive growing up?
  • What were the big emotional issues around money in your family?

The Wolf and I have been discussing this and we’re going to share our Money Narratives in a separate, follow-up post.

An interesting theme from the book is the way in which money is not special or unique in offering parenting challenges, but is simply another vector for making poor parenting choices in general. For example, the authors talk about the importance for children in experiencing struggle in the process of mastery, both because it is inherent in learning experiences and necessary for an individual to learn that they can not achieve mastery without a period of struggle as an amateur, but also because children who do not struggle do not achieve mastery, they are simply rescued by the adults around them. You can rescue someone by doing their homework for them or you can rescue them by paying off their credit card bill. It isn’t money that is “spoiling”, it is the rescuing.

Another item the authors placed emphasis on was the need for including philanthropy in the family culture surrounding wealth and money. I am a skeptic on the mainstream practice of charity. I was pleased to see the authors discount “charity” specifically in favor of “philanthropy” as a broader term encompassing any activity aimed at making the world a better place for mankind to live in. I also appreciated that they disclaimed simply writing checks or disbursing financial resources to organizations and instead talked about the importance of physically serving, in person and with one’s time and skills, and of making this a family activity. The discussion overall was thought-provoking and has given myself and the Wolf some homework to do in thinking about how we want to more closely integrate philanthropy in the core of our family values.

There’s more of value in this book, even if it is, to me anyway, mostly just Good Parenting Common Sense at this point. I’ll organize my remaining notes in a separate follow-up post for easier perusal by those interested in going deep.

Review – Leader Effectiveness Training

Leader Effectiveness Training

by Dr. Thomas Gordon, published 1977, 2001

Introduction

I find this book to be interesting as a potential “handbook of general management practices” and as such, I made extensive notes throughout the text as I read. There are many sections of the book that I copied in whole into my notes. My plan for this review, unlike other reviews focused on pithiness and synthesizing my impressions into a summary, is to keep more of these notes and direct transcriptions from the book in tact so that I have a good resource in the future.

What is leadership effectiveness?

How to influence people without using power is the key to leader effectiveness.

A revolution has started– a human relations revolution of great significance. People want to be treated with respect and with dignity; people are demanding to have a strong voice in their own working lives; people are less willing to be coerced and exploited; people want the right to achieve self-respect in their work and have work that is meaningful and rewarding; people are rebelling against inhuman working environments in very human ways — by jobhopping, absenteeism, apathetic attitudes, antagonism and malicious mischief.

While workplace regulation and government interference don’t help the capitalist or manager in this regard, the shift in workplace expectations is cultural and -psycho-intellectual-progressive (not political-progressive!) and gone are the days, real or imagined, of early industrialism in this country in which the business had all the power and could dictate, like a “captain” how would would be performed or else. Today, the dignity of the organization’s members is paramount to leadership effectiveness and great managers both a.) leave their associates feeling heard and understood and b.) offer them agreeable reasons to do the company’s work that serve their own self-interests.

Seems simple enough, so why does workplace and managerial conflict persist?

People come naturally to these built-in patterns of negative responses; they learned them when they were children. The leader inherits each group member’s “inner child of the past.”

[…]

Because group members at first perceive most leaders as probable controllers and dominators, that’s the way they will respond to her, even though the leader may have no intention of using power and authority.

It is vogue to ask of people to “leave your personal problems at home.” But this proves naive because it is the same person having problems at home who comes to work– there is no way to cleave one’s personality into two halves, work and personal. Further, people wish to believe that personality dynamics are mysterious or pertain only to events and developments occurring in the present, adult life. However, just as it is the same person at work and at home, it is also the same person who is an adult now but was a child in the past! A manager need not become people’s personal therapists, but they do need to understand that many of the negative, “childish” behaviors they witness in workplace conflict are in fact a result of unmet childhood needs and failed coping strategies developed in childhood adversity and trauma.

Being the leader doesn’t make you one, because leaders don’t automatically get the respect and acceptance of their group members; so in order to earn the leadership of their group and have a positive influence on the group members, leaders must learn some specific skills and methods.

How leaders acquire followers

There is a set of principles rooted in human evolutionary biology and the logic of economic scarcity that informs social organization development and leadership roles therein:

  1. Every individual is engaged in a struggle to survive by meeting needs and relieving tensions
  2. Means are necessary to survival
  3. Most means are acquired through relationships with other people; therefore people and the groups they form become the means of survival
  4. People seek out relationships in which others are seen as the means of survival
  5. People join groups with the goal of satisfying their needs and ensuring their own survival
  6. People follow a leader and permit them to direct their activities whom they believe will help them get what they need and want to survive

Organizational needs are primarily for increased productivity and efficiency, while the group members needs are sometimes those that motivate them to resist pressure for increased production and efficiency.

An effective leader cannot be only a “human relations specialist” nor only a “productivity specialist”, they must be both.

A job must provide opportunity for growth, responsibility, recognition and advancement if it is to be satisfying; it is not enough to simply remove dissatisfying items from a job.

Expecting people to show up for work just to earn a paycheck is not enough. People also want a sense of personal satisfaction and meaning from doing work they consider important and doing it well.

The principle function of a group leader is to facilitate problem-solving; in somewhat different times, it is to maximize productive work time and achieve mutual need satisfaction.

Effective leaders must behave in such a way that they come to be perceived almost as another group member; at the same time they must help all group members feel as free as the leader to make contributions and perform needed functions in the group.

Group members draw away from leaders who make them feel inadequate or lower their self-esteem.

When leaders achieve this “another member” status, they actually increase the contributions they can make to the group, because their ideas will get evaluated like those of other members.

An effective group leader, then, does not need to solve problems, but to see to it that they get solved.

A 6-step process for effective problem solving

  1. Identifying and defining the problem
  2. Generating alternative solutions
  3. Evaluating alternative solutions
  4. Decision-making
  5. Implementing the decision
  6. Following up to evaluate the solution

Observant leaders can use “signaling behavior” to become alert to the existence of a problem:

  • being unusually uncommunicative
  • sulking
  • avoiding you
  • excessive absenteeism
  • being unusually irritable
  • not smiling as much as usual
  • daydreaming
  • tardiness
  • looking downcast or depressed
  • being sarcastic
  • walking slower (or faster)
  • slouching in their chairs

Once alert to a problem, a leader can follow the problem-solving process to resolve it and thus allow the team member to return to their productive functioning within their organizational role.

As a rule, people don’t get down to the real problem until after they have first ventilated a feeling or sent some opening message.

It has not been an evolutionarily-successful social strategy for human beings to be directly confrontational. As a result, most people learn in childhood to show they are hurt or have a problem without specifying what it is upfront. This necessitates the leader engaging in an exploratory process to help the person with the problem feel comfortable revealing what their problem actually is.

The “helpee” usually will not move into the problem-solving process unless the listener sends an invitation– opens the door for the helpee:

  • “Would you like to talk about it?”
  • “Can I be of any help with this problem?”
  • “I’d be interested to hear how you feel.”
  • “Would it help to talk about it?”

Active Listening as a tool for building trust and leader engagement

Active Listening involves establishing equilibrium between the expression of the person needing help and the impression being received by the one trying to help them. Frequent and continuous feedback of the results of the receiver’s decoding is what “Active Listening” is all about. Listeners need only restate, in their own language, their impression of the expression of the sender. It’s a check: is my impression acceptable to the sender?

At least two ingredients are necessary in any relationship of one person fostering growth and psychological health in another– empathy and acceptance. Empathy is the capacity to put oneself in the shoes of the others and understand their “personal world of meaning.” Acceptance is feeling good about what a person is doing.

The 12 Roadblocks to Communication

There are 12 common roadblocks to effective, empathetic communication between leaders and followers and almost every leader makes the mistake of running into one of these roadblocks at some time or other in the course of carrying out their leadership duties.

  1. Ordering, Directing, Commanding
  2. Warning, Admonishing, Threatening
  3. Moralizing, Preaching, Imploring
  4. Advising, Giving Suggestions or Solutions
  5. Persuading with Logic, Lecturing, Arguing
  6. Judging, Criticizing, Disagreeing, Blaming
  7. Praising, Agreeing, Evaluating Positively, Buttering Up
  8. Name-calling, Ridiculing, Shaming
  9. Interpreting, Analyzing, Diagnosing
  10. Reassuring, Sympathizing, Consoling, Supporting
  11. Probing, Questioning, Interrogating
  12. Distracting, Diverting, Kidding

What makes these roadblocks ineffective tools of communication?

Implicit in these 12 categories of listener responses is the desire or intent to change rather than accept the sender, acting as vehicles for communicating unacceptance. A climate of unacceptance is very unconducive to personal growth, development and psychological health.

Listening helps keep the responsibility for problem-solving with the member. The 12 Roadblocks tend to grab responsibility away from the owner of the problem and deposit it in the hands of the leader.

Part of demonstrating acceptance is being willing to hear the WHOLE person, not just the part of the person we enjoy being around or working with. Feelings, even negative feelings, are part of everyone’s total reality and existence and will be a necessary part of an effective leader’s daily experience.

Contrary to the “feelings don’t belong here” belief, there is evidence that expressing feelings actually increases a group’s effectiveness and productivity. Openness in expressing feelings serves very much the same function for a group as pain does for one’s organism.

Leaders should treat feelings as “friendly”, not dangerous. Feelings should be welcomed because they are cues and clues that some problem exists.

Negative feelings can be quite transitory. People purposely select strong negative feelings as codes to communicate “I want to make sure I get your full attention” or “I want you to know how bad you’ve made me feel.”

However, don’t confuse the simple expression of a negative emotion as the start and end point of the problem to be explored. Sometimes people don’t know what the real reason is for their discomfort and need help finding it, and other times they just aren’t comfortable saying what it is.

People’s problems are like onions– they come in layers.

This is not unlike a child’s temper tantrum, and, as parents know full well, the best strategy is to wait for the feelings to dissipate.

Leaders do a lot of teaching– giving instructions, explaining new policies or procedures, doing on-the-job training. Yet very few leaders have received special training to carry out this important function.

Little or no learning is going to occur until you acknowledge the team member’s feelings and help him work through them somehow. Your teaching has to stop until you get evidence that he is again ready to learn. This is the most important principle of effective teaching. Just as you can’t be a leader without followers, you can’t be a teacher without learners.

Getting learners more actively involved and participating in the learning process is the mark of an effective teacher.

It’s also naive to believe that problems can simply be ignored or avoided.

The price unassertive leaders pay is that the problems rarely go away; they suffer in silent marytyrdom or build up feelings of resentment toward the person causing the problem.

The difference between “I-Messages” and “You-Messages”

You-Messages carry a high risk of damaging relationships because:

  • they make people feel guilty
  • they may be felt as blame, put-downs, criticism or rejection
  • they may communicate a lack of respect for the other person
  • they often cause reactive or retaliatory behavior
  • they may be damaging to the recipient’s self-esteem
  • they can produce resistance, rather than openness, to change
  • they may make a person feel hurt and later, resentful
  • they are often felt as punitive

People are seldom aware their behavior is unacceptable to another. Their behavior is usually motivated only by a desire to meet their own needs, not by a deliberate intent to interfere with the needs of others. When you send a You-Message, you communicate “You are bad for doing something to meet your needs.”

I-Messages are less confrontational because they represent a plea for help from one person to the other. Most people are willing to be of service to others when asked for their help.

The Three Components of a Complete I-Message:

  1. a brief, non-blameful description of the behavior you find unacceptable
  2. your honest feelings
  3. the tangible and concrete effect of the behavior on you (the consequences)

BEHAVIOR + FEELINGS + EFFECT

When people resist changing, it is generally useless to keep hammering at them with subsequent I-Messages; what is called for at such times is a quick shift to Active Listening.

The “diagnostic model” is the fashionable management belief that a leader’s job is to figure out what kind of person each of their team members is and then to speak “their language.”

The assumption implicit in the diagnostic model is that it is the leader who assumes responsibility for producing changes in the group members, and the more leaders know about their team, the cleverer they will be in selecting methods for changing them. This is ultimately a method of manipulation.

This is the “language of control” versus the “language of influence” in the confrontive model, where the leader cares more about knowing how people feel than why they feel that way.

With the confrontive model, leaders need only understand their own feelings and how to communicate them in a nonblameful way; then they need to put listening skills to work so they and their group members can work out mutually acceptable solutions. This is simpler than trying to “figure people out” to manipulate them into doing what you want done.

The role of meetings for effective leaders

There are two kinds of meetings, each with a distinct purpose: informational and problem-solving.

Informational meetings are for such purposes as personal growth, continuing education, keeping informed about what other group members are doing (including the leader). Should problems arise, they should be put on the agenda for the next Problem-Solving Meeting. Problem-Solving meetings have 6 types, following the six step process for problem-solving outlined above.

An organization without many problems is one that is not growing, changing, adapting. Expect problems, and embrace them as vehicles to making organizational progress!

Leadership effectiveness requires regularly scheduled meetings for problem-solving and decision-making with your management team. “Show me an ineffective organization or group and I’ll give you a leader who either does not have management meetings at all or who conducts them poorly.”

Guidelines for effective management team meetings:

  1. Frequency of meetings; it is important to meet at the same time, day and place on a regularly scheduled basis, with or without the leader
  2. Duration of meetings; meetings should start and end at rigidly enforced times, and include a break if meeting for longer than two hours; it is better to have multiple meetings than one that is too long
  3. Priority of meetings; ideally the meeting should have priority over other organizational responsibilities and people should be prepared to be fully present during the meeting
  4. Alternates for members; if a member can not attend, he can designate an alternate with authority to act on his behalf
  5. Place of meeting; conference rooms with sufficient privacy, quiet, seating and comfort are preferable to offsite lunches or dinners
  6. Physical arrangements; white boards, chart pads and other note-taking instruments should be present, members should be seated and have tables for writing on and refreshments for relaxing; the meeting leader should not necessarily sit at the head of the table
  7. The recording function; the leader should not be the recorder as they must be free to perform other functions; the recorder can be a designated person or a rotating responsibility; the recorder should capture decisions, plans for dealing with unresolved problems, problems emerging from the discussion to be placed on future agendas, task assignments and follow-up actions; a brief formula is a statement of the problem and who is to do what by when; meeting notes should be distributed to attendees after the meeting
  8. Developing the Agenda; the group should own its own agenda, not the leader; the agenda can be collected and formed before the meeting or at the beginning; discussion should wait until the agenda is complete
  9. Establishing priorities for the agenda; the most critical items should be discussed first
  10. Rules for speaking; effective groups usually function informally; the leader can be most helpful not in setting rules, but in ensuring each attendee has a chance to provide input
  11. Kinds of problems appropriate for the group; typically appropriate problems are those which require data from the group to solve, and whose solutions require the group members to implement or which effect the members of the group
  12. Kinds of problems inappropriate for meetings; never use group time to solve problems affecting only some of the members, that are too unimportant for that level of the group, that require study and preliminary data gathering (without conducting this first), or that are outside the authority of the group
  13. Rules for decision-making; ideally, all members of the group should agree on the solution and the problem should be discussed until all members are able to voluntarily buy in; voting should only be used to help the group understand which direction members are leaning, not to settle upon the solution and make a decision; when time does not permit further discussion, decision-making can be delegated to one, two or three members acting as a subgroup
  14. Confidentiality of Group Meetings; the procedures of the group should be kept in confidence to encourage open sharing, and only the decisions of the group should be shared publicly, not how they were arrived at
  15. Disposition of Agenda Items; every agenda item should be disposed of by reaching a solution, delegating the problem for further study outside the group, delegating the problem to an individual or subgroup for a recommendation, being placed on the agenda of a future meeting, taking the problem off the agenda by the person submitting it, or having the problem redefined in new terms; no problem should be left hanging
  16. Record of the Meeting; notes should be distributed promptly and cover all decisions made by the group, the disposition of all agenda items and all task assignments with due dates including WHO does WHAT by WHEN
  17. Procedures for Continual Evaluation of Group Effectiveness; the group can improve the functioning of its meetings by periodically reflecting upon itself and evaluating its own performance by written or oral evaluation and feedback

Some leaders pride themselves on having a problem-free workplace. They ask and expect people to “forgive and forget” or, worse, to not bring up problems in the first place. They pay a heavy price for this attitude of enforced ignorance.

The absence of conflict may be symptomatic of an organization or group that is not functioning effectively– not growing, changing, adapting, improving or creatively meeting new challenges. The number of conflicts in groups (including families) is not at all indicative of how “healthy” they are. The true index is whether the conflicts get resolved and by what method they get resolved.

I have heard executives proudly describe their groups or organizations: “We’re just a big happy family around here– we get along, no problems.” I am always suspicious of such leaders, as I am suspicious of husbands and wives who say, “We’ve been married for twenty years and we’ve never had a fight.” Usually that means that their conflicts are not allowed to surface and be faced.

Beware also of team members who avoid bringing up conflicts in order to earn rewards and avoid punishment.

In relationships with leaders who rely heavily on reward and punishment, group members selectively send messages that they think will only bring rewards, avoiding messages that might invite punishment.

These leaders, too, believe they are operating without problems or conflict, but are usually unpleasantly surprised to learn something major has simply been hidden from them out of view!

It gets a lot of mocking treatment amongst pundits and the entertainment industry, but it’s nonetheless worth reiterating the The No-Lose Method of Conflict Resolution: we will work together to find a solution to this problem that respects both our needs. For organizations which fear reward and punishment-based leadership, this can be an effective means of building trust that problems can be talked about because they will be solved to everyone’s satisfaction.

An additional concept is the “Principle of Participation” which states that those who are responsible for helping to shape a decision, feel responsible for seeing that it works. Utilizing the PoP, leaders can avoid the temptation to dictate solutions to problems that are brought to their attention and instead get their team members involvement in finding a resolution that they will actively support.

The Periodic Planning Conference Concept

People who believe they ARE the organization will want to contribute to its success, this means people need:

  1. Work that is meaningful and provides need-fulfilling experiences
  2. Their ideas and contributions are valued and needed
  3. Guidance for how to grow and develop so they can enjoy the satisfaction of being more competent over time
  4. A feeling of freedom and self-determination through improving their own performance

The Periodic Planning Conference (PPC) is an instrumental practice in soliciting their ideas, providing guidance and giving them a sense of self-determination in improving their performance such that ultimately work becomes more meaningful and need-fulfilling because the person is creating their own work.

The PPC is an alternative to the annual performance appraisal and is instead a regularly scheduled conference, generally every six months, with each group member. It may be as short as a half hour, averages two hours but may involve several meetings stretched over a period of days.

Items for discussion:

  • Group member’s ideas for improving performance in the next six months
  • Ideas for developing new skills
  • Plans to institute changes in carrying out functions of the job
  • Discuss ways the group leader can help the group member accomplish their goals in the next six months
  • Discuss with group leader ANY problem or concern impacting their job performance, job satisfaction or future with the company

It focuses on FUTURE performance (what can be done) rather than PAST performance (what has been done). It has no scores and focuses on job functions rather than personal characteristics or qualities. It is a two-way conference.

The rationale:

  • It is the leaders’ responsibility to help the individual member improve their performance
  • Provides useful organizational by-products:
    • Identifying qualified candidates for each level of management
    • Providing means for systematic follow-up and development of people
    • Focus on job performance instead of personality traits (de-personalize management)
    • Help people to help themselves grow in the job and the org
  • Builds a relationship between leader and group member where free discussion can exist and problems can become visible and addressed
  • Focuses on the future, engages with positive behaviors to make improvements
  • Group members become more engaged in their work by suggesting solutions to their own problems
  • Provides an opportunity to resolve conflicts when they arise, creating a mutually rewarding relationship

Important assumptions to discuss and keep in mind during a PPC:

  • Companies face competition and must make constant progress to avoid being surpassed by competitors; for the company to grow, people must grow; most people don’t like standing still
  • There is ALWAYS a better way of doing things
  • No one is EVER working at 100% of capacity
  • Change, growth and modification are an inevitable part of effective organizations
  • People are strongly motivated to accomplish goals they set themselves, not goals set for them by others
  • People are happier when given a chance to accomplish more

Steps to prepare for a PPC

  1. Prepare your people
    1. Explain the deficiencies of traditional performance-rating systems
    2. Explain the rationale of the PPC and its assumptions
    3. Listen to the feelings of team members
    4. Influence them to try the new PPC system on an experimental basis
  2. Get mutual agreement on job functions; what is the team member expected to contribute to the organization? What do they do in return for their wage/salary?
    1. What do you do to contribute to the organization?
    2. What do you do that warrants the organization paying you a salary?
    3. Why does your job exist? What is it supposed to contribute?
    4. When you feel you are doing a good job, what are you actually accomplishing for the organization?
    5. Procedure
      1. Explain the definition of a job function as opposed to a job duty
      2. Ask the team member to develop his own list
      3. Developer your own list as the leader
      4. Review them together
  3. Get mutual agreement on how performance is to be measured
    1. Reduces misunderstandings
    2. Points out what data will be needed for the group member to evaluate their own performance

Conducting the PPC

  1. Set the date for the PPC in advance, preferably by 1 week minimum
  2. Ask your team member to prepare goals in preparation for the conference
  3. Provide an opportunity to ask questions about the PPC
  4. Explain that the focus of the PPC is on the future, not the past, and that the team member is expected to “carry the ball” in presenting goals
  5. Explain your own goals for the work group, so the team member understands the larger context

Potential questions to prompt the team member in preparing for the PPC:

  • What do you want to accomplish in the coming year?
  • In which of your job functions do you feel the need for improvement?
  • What are your goals for doing a more effective job?
  • What help will you need from the organization to attain this goal?
  • What is your program this year for improving your performance or the performance of your work group?
  • What benchmark will let you know that you have improved?

Key points to remember about the PPC:

  • It’s the team member’s ball. Get his ideas and feelings out first. Active Listening.
  • Remember to keep the discussion forward-looking, the past is gone.
  • When it’s your turn to talk, be candid, honest and open. Send I-Messages.
  • Secure agreement on the goals to be accomplished. Keep their number to a workable size. Use Method III.
  • As a leader you want to have a clear understanding of how your team member plans to reach each goal– what actions are planned.
  • Share ideas when you think there is an opportunity or need
  • Maintain a climate that is warm, friendly and informal, but task-oriented.
  • Setting goals is a commitment to change, some may resist sticking their necks out
  • Review and put into writing goals agreed upon, with a copy for each participant (and, can share with the group)

Implementing the decisions of a PPC

  1. Provide data needed to evaluate progress
  2. Provide material, financial or personnel resources required to accomplish goals
  3. Make yourself available as a counselor or facilitator of problem-solving (use the Six Step process)

Expected benefits of the PPC

  1. Team members respond to trust by becoming more responsible and less dependent
  2. Higher motivation in your team members
  3. Greater self-fulfillment and satisfaction from team members
  4. You will spend less time supervising and overseeing
  5. Witness continuous improvement in job performance; doing things better will become the norm

Deeper issues for leaders

Just as the adults before us are grown versions of the children they once were, and a person at work is the same person he is at home, leaders must reflect on how their choices and actions will extend and reverberate beyond the narrow confines of the workplace. These personal philosophical inquiries may be of benefit for the leader in contemplating his place in society at large and, more importantly, what kind of impact he wants to have on that society:

  • What kind of person do you want to be? How you behave as a leader will shape you as a person
  • What kind of relationship do you want? How you behave as a leader will determine the kinds of relationships you have with others
  • What kind of organization do you want? Organizations are made of people in relationships, so the kinds of people and the types of relationships they have determine the type of organization they form
  • What kind of society do you want? An open society requires open leaders running open organizations where the members are allowed to exercise their own talents and wills