Decision-Making

Stop Searching for the Best Productivity System

May 29, 2019 by Nagesh Belludi Leave a Comment

One of the reasons many people are not as productive as they want to be is not because they haven’t found the right ideas that can help them take charge of their lives.

They can’t be productive because they keep looking for “better” ideas instead of settling on a “good enough” idea and then putting it into rigorous practice.

Looking for the Best Can Be Counterproductive

Stop Searching for the Best Productivity System This is comparable to weight-loss programs. People buy more and more books on dieting, but don’t lose weight by merely buying diet books. It’s easier to buy books than it is to go on a diet. Recognizing that most diet plans boil down to basic strategies—eat more fruits and veggies, keep portions under control, and stay physically active—and implementing these simple ideas purposely could be as effective a diet program as any out there.

Look, no productivity tool can fit all your requirements. The inadequacies of any productivity system you try out will drive you towards looking for a different tool. But this quest to define the best never ends.

Idea for Impact: Never underestimate the power of a simple idea that is well executed.

If you can identify a simple system and implement its key principles with discipline, you may not need the “best” system.

As Charlie Munger has stated in describing the simplicity of Warren Buffett‘s philosophy at Berkshire Hathaway, “Our ideas are so simple that people keep asking us for mysteries when all we have are the most elementary ideas.”

When Stress is Good

November 5, 2018 by Nagesh Belludi Leave a Comment

Stress and Anxiety Can Lead to Improved Performance

Why Some Stress Is Good for You Many people claim that they work best under pressure. There’s some truth to that. Stress is a natural response in highly competitive environments. Before an exam, important meeting, or contest, your heart rate rises and so does your blood pressure. You become more absorbed, alert, and efficient.

However, this favorable relationship applies only up to a certain level of stress. Past this level, stress impairs your performance—and eventually your heart.

In 1908, Harvard psychologists Robert Yerkes and John Dodson first described the beneficial and harmful effects of stress (“psychological arousal”) on performance in a graph the shape of an upside-down U. According to the Yerkes-Dodson Law, the ascendant curve reflects the energizing effect of arousal. The descendant curve reflects the negative effects of stress on thinking and learning, or performance in general.

Too Much Anxiety and Stress Impairs Performance, but so Does Too Little: The Yerkes-Dodson Law

Many physiological studies have demonstrated that stress enhances your performance by causing your brain to use more of its capabilities, improve memory and intelligence, and increase productivity. Without stress, athletes, performers, executives, and students are likely to underachieve.

There is an optimum level of arousal for every kind of task. So how do you find the right balance? How do you get yourself into the performance zone where stress is most helpful? How much stress is good? The answers depend on individual disposition, the types of stressors, the nature of the task itself, and perceptions of what is stressful to you.

When Stress is Good: The Yerkes-Dodson Law

Idea for Impact: Stress at Work May Be Inevitable but it Doesn’t Have to Be Detrimental

Stress can be a motivator. But don’t seek out stress—less of it is better. Make the stress you do have work for you. Becoming conscious of stress as a potential positive can reduce the harm it causes.

Develop an awareness of when you hit the limits beyond which working longer or harder is counter-productive (sportsmen tend to choke under intense pressure.) When you feel overwhelmed, look for ways to reduce or eliminate the stressors so you can become more productive again. Ask for help.
Performance deteriorates when your stress level is either too high or too low for a given task. Seek the optimal level of anxiety that can impel you forward without causing you to fight back or give up.

Idea for Impact: The Right Level of Anxiety Can Be a Positive Force for Driving Employees Forward

Anxiety and optimal performance is an individual affair. The Yerkes-Dodson Curve shifts as the performers become established and experienced with the undertaking.

Astute managers repeatedly assess and re-assess where their team members land on the Yerkes-Dodson Curve. Managers can identify over-stressed or under-motivated circumstances with employees and intervene quickly to tailor the level of stress.

Creativity by Imitation: How to Steal Others’ Ideas and Innovate

October 22, 2018 by Nagesh Belludi Leave a Comment

Innovation by Imitation: Many Innovations Come from the Outside---How Henry Ford Developed the Moving Assembly Line for the Model T

Emulating others’ ideas is an underappreciated learning tool. Many creative innovators set forth as remarkably astute mimics of others. “Good artists copy, great artists steal,” prods a creator’s maxim often misattributed to Picasso.

Imitation is a leading pathway to business innovation, even if being an imitator is anchored by a sense of derision. Ever more businesses are nicking great ideas wherever they can obtain them—in their own industries or beyond. Hospitals have adapted safety and efficiency procedures from the military and the airline industry. Aircraft manufacturers have adopted the car industry’s lean supply chain management concepts. Ritz-Carlton, the luxury chain of hotels and resorts, runs the Ritz-Carlton Leadership Center that has helped trained its legendary cult of customer service and employee empowerment best practices to managers from companies across industries.

Creativity by Taking Existing Ideas: Applying Them in a New Context

The most prominent example of innovating by imitation is Ford’s development of the automobile assembly line—a system Henry Ford copied (and improved) from the Chicago meat processing business.

Innovation by Imitation: Genesis of the Moving Assembly Line Henry Ford’s relentless ambition to build his Model T a high-volume-low-cost automobile, together with his engineering knowledge and manufacturing experience provided the leadership and creative environment that nurtured the development of the moving mechanical assembly line. Today, the moving assembly line is the epitome of manufacturing. Almost everything that is now industrially manufactured—automobiles, aircrafts, toys, furniture, food—passes down assembly lines before landing in our homes and offices.

The genesis of the moving assembly line is in the American agricultural products industry. During the late 18th century, the movement of grains changed from hand labor to belts and later moving hoppers.

Innovation by Imitation: Many Innovations Come from the Outside

Innovation by Imitation: Chicago Slaughter Houses Pioneered the Moving Disassembly Line Before Henry Ford Started His Assembly Line By 1873, Chicago’s meat-processing industry adapted belts and hoppers to transform beef and pork production into a standardized, mechanized, and centralized business. After cows and pigs travelled to their fate in train cars from farms throughout the Midwest, they were dropped into hoppers and killed. Conveyor belts then moved carcasses past meat cutters, who progressively removed various sections of the animal, cut them into appropriate sizes, and repackaged and dispatched processed meat across the United States.

The meat processors’ task was disassembly (as opposed to putting together automobile parts in Ford’s plants.) Each worker had a specific, specialized job. Production moved swiftly. The American writer Upton Sinclair famously described this industry’s ghastly working conditions in his acclaimed novel The Jungle and said, “They use everything about the hog except the squeal.”

Chicago Slaughter Houses Were the Pioneers of the Moving Disassembly Line Before Henry Ford Started His Assembly Line

In the early 1900s, when Henry Ford wanted to keep Model T production up with demand and lower the price, Ford’s team explored other industries and found four ideas that could advance their goal: interchangeable parts, continuous flow, division of labor, and cutting wasted effort. Ford’s engineers visited Swift & Company’s Slaughterhouse in Chicago and decided to adopt the “disassembly line” method to build automobiles.

The introduction of the moving assembly line process in 1913 enabled increased production up to 1,000 Model Ts a day and decreased assembly time from 13 hours to 93 minutes. Additional refinement of the process, thanks to reliable precision equipment and standardized shop practices, shortened production time radically: within a few years, a new Model T rolled off the assembly line every 24 seconds. First produced in 1908, the Model T kept the same design until the final one—serial number 15,000,000 rolled off the line in 1927.

Auschwitz-Birkenau and Victims of the Holocaust

Sadly, just as Henry Ford copied the Chicago meat processing and perfected the moving assembly line, the Nazi apparatus copied Ford’s methods of mass production to massacre six million people. While Midwestern butchers processed the livestock carcasses, the Nazis systematically handled corpses of the victims of the Holocaust. Nazi operatives removed victims’ hair, clothing, shoes, gold teeth, hairbrushes, glasses, suitcases, and anything of value to be repurposed for the Reich. The atrocities of this inexpressibly shocking disaster are on display at the train tracks and the museums of Auschwitz-Birkenau, Poland.

Formal Strategic-Benchmarking Programs

Smart businesses have formal strategic-benchmarking programs to achieve significant efficiency improvements: they pinpoint the strategic capabilities that matter most to their businesses, seek out companies or businesses that currently manage those capabilities best, and try to copy and deploy those capabilities as rapidly as possible. But time is of the essence for the success of these undertakings, as the management guru Tom Peters warns,

I hate Benchmarking! Benchmarking is stupid! Why is it stupid? Because we pick the current industry leader and then we launch a five-year program, the goal of which is to be as good as whoever was best five years ago, five years from now. Which to me is not an Olympian aspiration.

Imitation is a Key Characteristic of Highly Creative People: The Case of Steve Jobs Copying from Xerox

One of the key characteristics of highly creative people is their exposure to and experience with working in several related domains. They are very good at crossing domain boundaries, relating their creativeness in new and perhaps unexpected ways, and adapting knowledge into new domains. The following case of one of history’s most famous innovators illustrates this distinguishing characteristic.

Steve Jobs of Apple introduced the revolutionary Lisa computer in 1983. It featured such innovations as the graphical user interface, a mouse, and document-centric computing. Jobs had taken—and refined—all these inventions from Xerox’s PARC research labs and introduced by Xerox on its commercially-unsuccessful Alto and Star computers in 1981. The biographer Walter Isaacson writes in his best-selling Steve Jobs: “The Apple raid on Xerox PARC is sometimes described as one of the biggest heists in the chronicles of industry.” Isaacson cites Jobs: “Picasso had a saying—‘good artists copy, great artists steal’—and we have always been shameless about stealing great ideas… They [Xerox management] were copier-heads who had no clue about what a computer could do… Xerox could have owned the entire computer industry.”

Innovation by Imitation: Steve Jobs of Apple copied Xerox's PARC innovations in graphical user interface, a mouse, and document-centric computing

Idea for Impact: Borrow Ideas from Others and Combine Them with Your Own Creativity

Interestingly, many “benchmarking” exercises in the world of business—even academia—do not come “top-down” out of strategy. In other words, innovations by imitation are typically not driven from the top down. Instead, they materialize from everyday operational challenges—those painful experiences that send managers scuttling for solutions in a hurry.

Look outside your industry. To improve your creativity, try spending time researching other smart companies—even those outside of your industry. Learning directly from other companies is a useful, underutilized form of research for finding ways to improve performance.

Attend to developments at your competitors and in other industries. Look for potential opportunities that have been discovered elsewhere. Avoid the “not invented here” syndrome—don’t reject other’s great ideas. Keep an open mind.

Investing is Saying “No” 99% of the Time

September 22, 2018 by Nagesh Belludi Leave a Comment

As an investor in high-quality public companies and startup ventures, I spend very little time each on a lot of investment opportunities and a lot of time each on a very few opportunities. Over seven-tenths of the returns I’ve ever produced have been with just four companies.

I try to learn of as many ideas and opportunities as possible, especially in companies led by first-class entrepreneurs and businesspeople. From time to time, I spend hours at the community library flicking through one-page summaries in the Value Line Investment Survey, arguably the best investment product available on the market.

Exposing myself to many opportunities makes me a better investor. Even if my stock-filtering method quickly guides me to say “no” commonly, my goal is to find a kernel of usable information to add to my “mental attic.” I can’t predict when something might come in handy to help make sound investment choices in the future. As the great investor Charlie Munger said at the 1996 Wesco Financial annual meeting,

Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly at scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime.

A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then, all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.

That Burning “What If” Question

August 8, 2018 by Nagesh Belludi Leave a Comment

The Rightness of Past Choices Become Obvious in the Clarity of Future Hindsight

In the Czech novelist Milan Kundera’s philosophical novel, The Unbearable Lightness of Being (1984; film adaptation, 1988) the womanizing protagonist Tomáš deliberates if he wants to be single or with his eventual wife Tereza:

We can never know what to want, because, living only one life, we can neither compare it with our previous lives nor perfect it in our lives to come.

…

There is no means of testing which decision is better, because there is no basis for comparison. We live everything as it comes, without warning, like an actor going on cold. And what can life be worth if the first rehearsal for life is life itself? That is why life is always like a sketch. No, “sketch” is not quite the word, because a sketch is an outline of something, the groundwork for a picture, whereas the sketch that is our life is a sketch for nothing, an outline with no picture.

The Mournful “What If” is a Powerful and Emotional Inquiry about Alternative Lives You Could Have Lived

Oftentimes, when dealt with adverse circumstances, life’s self-criticism apparatus kicks in. Plagued with self-doubt, life asks the questions “Why did things turn out this way?” and “Why wasn’t this experience what I expected it to be?” Regrets gnaw in the back of the mind, “How would my life be different?” and “I never shouldn’t have done this.”

And when you cognize life in hindsight, your lived life doesn’t usually compare favorably with your imagined, could-have-been life.

And that’s why you should refrain from ruminating about those non-lived lives—such projections of your mind only instigate sorrow.

Idea for Impact: Sketch the Picture of Our Own Choosing

That Burning 'What If' Question One of the most effective ways of eliminating regrets is to eliminate the underlying ignorance that is the cause. The wise fancy what the past was once and appreciate how it is molded them. But they no longer desire to live there or evoke the choices of the life that could have been.

As the great Stoics taught, you must reject regret, appreciate that you are now the distillation of all your past choices and experiences, and take the next positive little step. Reflecting on “What do I want to make of all of this?” and “What am I looking forward to?” can clarify your potential.

As Viktor Frankl emphasized in his 1946 masterwork on positive approach to psychological treatment, “Live as if you were living already for the second time, and as if you had acted the first time as wrongly as you are about to act now!”

Who wants to lament the life not lived when you can do dive into the life you’re actually in and do so much good now?

Live this choice. Sketch the picture of our own choosing.

Disproven Hypotheses Are Useful Too

June 21, 2018 by Nagesh Belludi Leave a Comment

Hypotheses are conjectures—often merely proposals or intuitions—about what may constitute facts.

A specific hypothesis can be tested for its adequacy and proved correct or incorrect using the scientific method. Sometimes, a hypothesis is accepted for the time being, until further evidence suggests an amendment.

It does not matter if a certain hypothesis is proven incorrect because, in itself, the falsification of a hypothesis can offer precious insight about the “what is not” to enhance the “what is.”

Hypotheses are the bedrock of scholarship. Scientific understanding accrues when many interrelated and tested hypotheses are used to develop theories, and rethink and restructure our knowledge.

How to Elevate Timing from Art to Science: Book Summary of Daniel Pink’s ‘When: The Scientific Secrets of Perfect Timing’

May 29, 2018 by Nagesh Belludi Leave a Comment

Daniel Pink’s When: The Scientific Secrets of Perfect Timing (2018) explores how the quality of the decisions we make are correlated with their timing.

Pink is an expert on motivation and management, and an author of such best-selling books as Drive: The Surprising Truth About What Motivates Us (2009) and To Sell is Human: The Surprising Truth About Moving Others (2012.) He describes When as not so much a “how-to” guide for making the most of our lives, but as a “when-to” manual for individual and group work.

The Best Times of the Day to Make Optimum Decisions

Pink’s principal theme is chronobiology—the science of how the body’s biological clocks can influence our cognitive abilities, moods, and attentiveness.

Drawing on scientific research on the science of timing, Pink concludes that the mental acuity, creativity, productivity, temper, and frames of mind for most folks follow an identifiable “peak-trough-rebound” template. Most people get their best work done in the mornings, suffer a trough of mental weariness in the afternoon, and experience a late-evening burst:

Our cognitive abilities do not remain static over the course of a day. During the sixteen or so hours we’re awake, they change often in a regular, foreseeable manner. We are smarter, faster, dimmer, slower, more creative, and less creative in some parts of the day than others. … [R]esearch has shown that time-of-day effects can explain 20 percent of the variance in human performance on cognitive undertakings.

Needless to say, this “peak-trough-rebound” phenomenon is fairly universal but differs among individuals. There are “larks” who do remarkably well in the mornings and “owls” who tend to embrace their late night productivity habits.

Optimizing Your Day with Daily Rhythms

According to Pink, “peak-trough-rebound” is attributable to the body’s relatively low temperature when we wake up. The increasing body temperature gradually boosts our energy level and alertness, which consequently “enhances our executive functioning, our ability to concentrate, and our powers of deduction.” As the morning evolves, we become more focused and alert until we hit a peak. Then our energy level wanes and our alertness declines, only to be restored in early evening.

Pink concludes that mornings are good for decision-making and that errors increase in the afternoons. Studies recommend that we schedule surgery in the mornings when surgeons tend to make fewer mistakes and avoid petitioning a traffic ticket in the afternoons because judges tend to be less considerate than in the mornings.

“Breaks are Not a Sign of Sloth but a Sign of Strength”

Pink emphasizes the risks of clouded judgment that characterizes the afternoon “trough.” As an example, Pink speculates that the sinking of the RMS Lusitania in 1915 was about the time of day—it’s captain’s ill-fated decisions were made in the afternoon following a night of no sleep.

With case studies of error-reduction in hospital operating rooms, Pink suggests “vigilance breaks” (quick team huddles for reviewing checklists and verifying courses of action) and restorative breaks (naps, short physical activities, or mental diversions) during troughs to “recharge and replenish, whether we’re performing surgery or proofreading advertising copy.”

“Timing is Everything” and “Everything is Timing”

Based on the mentioned studies’ correlations and causations, Pink offers advice further than daily scheduling—from marriage to switching careers and sports:

The best time to perform a specific task depends on the nature of that task. Identify your chronotype (Pink offers an online survey,) understand your task, and decide on the most suitable time. Do not let mundane tasks sneak into your peak period. Additionally, if you’re a boss, understand your employees’ work patterns and “allow people to protect their peak.”
Tasks that need creativity and a flash of insight (rather than analytical perspicacity) are best done during the late-evening recovery period when the mind tends to be less inhibited and more open to inventive associations.
Harness the psychological power of beginnings—New Year’s Days, birthdays, and anniversaries are all natural times to make resolutions and start working on goals. Other opportunities for fresh starts include the first of the month, the beginning of the week, and the first day of spring.
“Lunch breaks offer an important recovery setting to promote occupational health and well-being”—especially for “employees in cognitively or emotionally demanding jobs.”
Afternoon coffee followed by 10- to 20-minute naps and leisurely daily walks are “not niceties, but necessities.” Drink a cup of coffee just before a nap—the 25 minutes it takes for the caffeine to kick in is the optimal length of a restorative siesta.
Morning workouts are best for people aiming to burn fat, lose weight, or build sustainable exercise habits. Folks trying to reach personal bests should seek out the afternoons, when physical performance tends to reach its zenith.
Studies suggest that people are most likely to run their first marathons at ages ending in 9—but those ages are also when people are most prone to cheating on their spouses.
According to one survey, switching jobs every three to five years in your early career can lead to the biggest pay increases.

Recommendation: Skim Daniel Pink’s ‘When’ for the Life Hacks

Daniel Pink’s When: The Scientific Secrets of Perfect Timing offers little fresh substance. Many of the cited studies’ implications, causations, and correlations are open to debate.

A speed-read of When, especially of the takeaway points at the end of each chapter, can offer some practical tips about when you are likely to be creative, focused, and least error-prone.

Parenthetically, the third and the final section on “Synching and Thinking” is out-of-place to Pink’s principal theme of timing, even if the case study of the synchronized effort that constitutes the Mumbai Dabbawala lunchbox delivery system is interesting. Pink explains that the importance of “syncing up” with people around you through a collective sense of identity and a shared purpose is “a powerful way to lift your physical and psychological well-being.”

Complement skimming Daniel Pink’s When with Michael Breus’s The Power of When (2016; Talk at Google.)

Why Risk Mitigation and Safety Measures Become Ineffective: Risk Homeostasis and Peltzman Effect [Mental Models]

May 17, 2018 by Nagesh Belludi Leave a Comment

Risk Homeostasis and Peltzman Effect are two concepts relating to how humans react to risks.

Risk Homeostasis is the notion that our personal psychological frameworks comprise a target level of risk towards which we direct our efforts.

We measure risk on our own “risk thermostat.” Because the risk in our environment changes continuously, we are incessantly forced away from our target risk level, but revert toward it by counteracting those external influences.

If the perceived risk of a situation exceeds our target level, we undertake defensive actions to reduce the risk. And if the perceived risk is lower than our target level, we attempt to increase our risk back to our target level by exposing ourselves to dangerous actions.

Why Risk Mitigation and Safety Measures Become Ineffective Consequently, people take more risks when they’re forced to act more carefully. For instance, requiring motorcycle bikers to wear helmets may make them take more risks—to maintain their level of thrill, not to get into accidents.

Peltzman Effect is the notion that people respond to increased safety by adding new risks. The namesake, economist Sam Peltzman, argued in 1975 that when automobile safety rules were introduced, at least some of the benefits of the new safety rules were counterbalanced by changes in the behavior of drivers. Peltzman posited that making seatbelts mandatory for cars resulted in reducing the number of occupant fatalities, but increased pedestrian casualties and collision-related property damages.

Peltzman made a case that even though seatbelts reduced the risk of being severely injured in an accident, drivers compensated by driving aggressively and carelessly—driving closer to the car ahead of them, for instance—so as to save time or maintain their level of thrill, even at the risk of causing damage beyond themselves and their cars.

Risk Homeostasis and Peltzman Effect remain controversial theories. Despite their apparent relevance, the prevailing evidence remains inadequate and inconclusive about how people behave less cautiously when they feel more protected and vice versa.

Further, Risk Homeostasis and Peltzman Effect challenge the foundations of safety and injury-prevention policies. They assert that the only effective safety measures are those that alter individuals’ desired risk level. Anything that barely modifies the environment or regulates individuals’ behavior without affecting their target risk levels is useless.

What Your Messy Desk Says About You

March 13, 2018 by Nagesh Belludi Leave a Comment

What Your Messy Desk Says About You

Appearances are Important

Your office and desk must seem organized. A messy office or a cluttered desk can not only impede your space and cramp your style, but also affect how your peers and superiors perceive you.

Clutter can drag you down, sap your energy, and reduce your efficiency. However, if clutter is your style, you should have every right to work the way you like to work.

A messy desk isn’t a professional flaw, but clutter may reflect of your competence. Untidiness can give an impression that your job may be too much for you to handle, or that you can’t get your thoughts and information organized.

How to Conquer Your Paperwork Crisis

As opposed to sorting through everything in your drawers, desktop, and filing systems, consider removing the whole lot somewhere else and only allowing the important things back.

Stephanie Winston, author of The Organized Executive, famously wrote that each clutter represents a decision not made. In this bestselling book, she recommends the “TRAF” system, a precursor to the “Inbox Zero” discipline that I’ve previously discussed on this blog. TRAF is an acronym for the four decisions you must make on each piece of paper that arrives at your desk. You can Toss it away, Refer or delegate it to someone else, Act on it, or File it if it absolutely deserves to be achieved. Don’t keep anything merely for reasons of habit or for sentimental reasons.
Don’t start tomorrow with today’s mess. Spending ten minutes at the end of your workday gearing your desk up for the next day can help you stay organized.

After you’ve taken steps to reorganize your office, sustain your system. Look for ways to further streamline and fine-tune your organization framework.

Idea for Impact: Don’t Let Clutter Spin Out of Control and Affect Other’s Perceptions

Taking too much time to organize can be just as ineffective—don’t end up spending so much time organizing that you don’t have the time to do anything else. (This is one of the shortcomings of David Allen’s Getting This Done system.) Learn to put things away as soon as you’re done working on them.

Being organized not only means less time wasted looking for things, but also rewards you with a greater sense of control and a favorable professional image.

Lessons from Peter Drucker: Quit What You Suck At

March 1, 2018 by Nagesh Belludi 1 Comment

Peter Drucker and Jack Welch on Strategic Prioritization: Strengthen or Abandon

The essence of leadership is risk- and opportunity-assessment and resource allocation. It follows that one of the persistent responsibilities of leadership is to mull over each individual and organizational endeavor and investigate, “Do we produce results that are meaningful and profitable enough for us to justify investing our resources to this purpose?”

Jack Welch’s Strategy for General Electric: #1 or #2 Businesses Only

When Jack Welch became CEO of General Electric (GE) in 1981, he set out to make GE “the world’s most competitive enterprise.” However, the company was a hodgepodge of many businesses—some unrelated or irrelevant, several unprofitable, and a few at the brink of failure.

Management pioneer Peter Drucker famously advised Welch to ask of each constituent of the GE business portfolio he now presided over, “If you weren’t already this business, would you enter it today? And, if the answer is no, what are you going to do about it?”

Welch’s responded with his legendary dictum that every GE division be—or become—the leading or the runner-up business in its respective industry, or plan to exit it completely.

Welch argued that in many markets, the number three, four, five, or six players suffered the most during cyclical downturns. On the contrary, number one or number two businesses could protect their market share by way of aggressive pricing approaches or by developing new products. Welch’s approach portended the emergence of oligopolies in many industries.

The resultant strategic focus eventually led to an immense restructuring of GE. Welch sold or discontinued dozens of divisions—including computers and time-shares. Over the next decade, he cut nearly one in four jobs at GE, warranting the nickname “Neutron Jack.”

By year 2000, GE had reached dominance or near dominance in most of its business markets across the globe.

Peter Drucker on Strategic Reprioritization

Explaining this method of strategic reprioritization, Drucker wrote in Post-Capitalist Society (1993,)

To turn around any institution—whether a business, a labor union, a university, a hospital, or a government—requires always the same three steps:

Abandonment of the things that do not work, the things that have never worked; the things that have outlived their usefulness and their capacity to contribute;

Concentration on the things that do work, the things that produce results, the things that improve the organization’s capacity to perform; and

Analysis of the half successes, half failures. A turnaround requires abandoning whatever does not perform and doing more of whatever does perform.

Drucker further elaborated on abandonment as the keystone for strategic reprioritization in his Five Most Important Questions (2015,)

To abandon anything is always bitterly resisted. People in any organization are always attached to the obsolete—the things that should have worked but did not, the things that once were productive and no longer are. They are most attached to what in an earlier book I called “investments in managerial ego.” Yet abandonment comes first. Until that has been accomplished, little else gets done. The acrimonious and emotional debate over what to abandon holds everybody in its grip. Abandoning anything is thus difficult, but only for a fairly short spell. Rebirth can begin once the dead are buried; six months later, everybody wonders, “Why did it take us so long?”

Idea for Impact: Assess What Endeavors Must Be Intensified or Abandoned

Don’t do—or continue to do—something just because it’s been a tradition, custom, or habit. Strengthen, abandon, or stay on. Align your efforts with your mission, your values, and the results you want to achieve.

If you abandon something important mistakenly, you can quickly pick up where you left off.

Invest your precious resources where the returns are rich.

Figure out what’s vital and stay focused, even if you have to cut your losses (read about sunk costs.)

Decision-Making

Looking for the Best Can Be Counterproductive

Idea for Impact: Never underestimate the power of a simple idea that is well executed.

Wondering what to read next?

Stress and Anxiety Can Lead to Improved Performance

Too Much Anxiety and Stress Impairs Performance, but so Does Too Little: The Yerkes-Dodson Law

Idea for Impact: Stress at Work May Be Inevitable but it Doesn’t Have to Be Detrimental

Idea for Impact: The Right Level of Anxiety Can Be a Positive Force for Driving Employees Forward

Wondering what to read next?

Creativity by Taking Existing Ideas: Applying Them in a New Context

Innovation by Imitation: Many Innovations Come from the Outside

Chicago Slaughter Houses Were the Pioneers of the Moving Disassembly Line Before Henry Ford Started His Assembly Line

Formal Strategic-Benchmarking Programs

Imitation is a Key Characteristic of Highly Creative People: The Case of Steve Jobs Copying from Xerox

Idea for Impact: Borrow Ideas from Others and Combine Them with Your Own Creativity

Wondering what to read next?

Wondering what to read next?

The Rightness of Past Choices Become Obvious in the Clarity of Future Hindsight

The Mournful “What If” is a Powerful and Emotional Inquiry about Alternative Lives You Could Have Lived

Idea for Impact: Sketch the Picture of Our Own Choosing

Wondering what to read next?

Wondering what to read next?

The Best Times of the Day to Make Optimum Decisions

Optimizing Your Day with Daily Rhythms

“Breaks are Not a Sign of Sloth but a Sign of Strength”

“Timing is Everything” and “Everything is Timing”

Recommendation: Skim Daniel Pink’s ‘When’ for the Life Hacks

Wondering what to read next?

Wondering what to read next?

Appearances are Important

How to Conquer Your Paperwork Crisis

Idea for Impact: Don’t Let Clutter Spin Out of Control and Affect Other’s Perceptions

Wondering what to read next?

Jack Welch’s Strategy for General Electric: #1 or #2 Businesses Only

Peter Drucker on Strategic Reprioritization

Idea for Impact: Assess What Endeavors Must Be Intensified or Abandoned

Wondering what to read next?