I wish my old firm had been like this.

I finally got around to reading the now infamous Netflix presentation on corporate culture. I had more than a dozen people point it out to me and must admit this actually raised my level of skepticism – “sure, ok another vapid corporate culture slideshow…”

I was wrong. I wish I had written this. These 9 values and how they should be implemented align entirely with my thinking and – my former colleagues will have to confirm / refute this – how I tried to run the businesses I was responsible for at DrKW, and how I tried to use my influence on the Management Committee to get the firm to adopt these values. In this latter goal I would have to say I failed miserably. As for the former, I think I was more successful but ultimately it was perhaps futile, surrounded as we were by a sea of culture that was strikingly different.

The sad thing is, I’m convinced had we adopted this culture – and as a relatively small investment bank it was within our control – I think the financial and business outcome for DrKW would have been quite different. I would go so far as to say it would continue to exist today and would have thrived as a nimble and unique competitor in the financial wreckage of the past two years. Instead, it was inevitably destined to disappear: to small to save, big enough to blow up.

But DrKW was unfortunately not unique in rejecting this positive culture. I can’t think of any investment banks that would entertain truly practicing even two or three of the Netflix values, let alone all nine. (I’ve only ever worked for three banks so maybe I’m wrong. Please correct me if you think this is the case.) And yet were they run along these lines, I am certain that the worst of the afflictions that beset the financial system would not have materialized. The crisis would not have been. I know that is a pretty strong statement. But I don’t think it is hyperbole.

There are many talented and extraordinary people in the financial services industry who, fed up with the toxic cultures, leave it as soon as they can afford to. I’m sure you could build an incredibly successful company by attracting this talent with a cultural framework like this. Maybe we’ll be able to do it. I’m sure someone will. I can’t wait.

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On leaders.

For me, the best definition of a leader is someone I would be happy to follow. I guess that makes Jacqueline Novogratz a leader in my book.

I first discovered her and her firm Acumen Fund in the summer of 2005 at TED Global in Oxford where she started her talk with her Blue Sweater anecdote (which aptly is the title of her new autobiography: The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World)

I then had the good fortune to see her speak again at TED Global in 2007, this time in Arusha, Tanzania.

And although there are many differences between Nauiokas Park and the Acumen Fund, I think it is fair to say that in shaping our vision for our firm, and even in planting the initial ideas as to the relevance of bringing a fresh approach to the business of investing in ideas and people, Acumen and Jacqueline have been an inspiration to Amy and I. And so it was great to see her get an excellent and well-deserved write up in the Economist recently. One passage in particular resonated with me as I sincerely hope one day as much can be said of Nauiokas Park in terms of having an impact that goes far beyond our capital resources and reflects a success in building an ideal and a community around the change we are trying to catalyze:

Her firm runs highly coveted fellowship and mentoring schemes, and its alumni are spreading its ideas throughout the development field. The firm’s influence in poor countries is also bigger than it first appears. By leveraging Acumen’s funds to obtain other financing, recipients are able to magnify their impact. Even more important, perhaps, is the firm’s catalytic role in sparking entrepreneurship in developing countries. Acumen devotes much time and money to training local managers, rotating experts from the developed world through its recipient firms and disseminating successful ideas.

In case anyone on Wall Street or Westminster is interested, this is what a leader looks like. We need more people like her in our Board and State rooms.

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No Country for Old Men

My friend Alex wrote a great post on how the current UK government just doesn’t get it. And it’s not about policy per se – upon which intelligent people can disagree – but more fundamentally on how the whole socio-economic-institutional paradigm is shifting, massively, below their feet. And there’s not a damn thing they can do about it. And therein lies the rub. The fact that they are powerless to change this despite commanding the heights of power does not compute.

To be fair, they aren’t alone – the instincts of many (most) politicians is to try to stuff the genie back in the bottle. Just look at the surreal-if-it-wasn’t-real going ons in France as just one example. The same is true of many Fortune 1000 business leaders.

And when I look at this through a demographic prism – as I am wont to do – I see a distinct pattern. I suspect that a propensity to cling to the historical norms of power and control is a cultural pathology that is particularly acute in the Baby Boom generation. This is partly a coincidence of timing – ie the power paradigm is changing on their watch – and exacerbated by their generational self-image: they are not old and reactionary, they are not “the man”. They are the vibrant transformational free-spirited children of the 60s and 70s, they are the ones that “get it”. Sixty is the new thirty right? But they worked hard to climb up the greasy pole of success, to make it to the corner office, to the top of the hierarchy. And it was bloody hard work. And they deserve to now be able to wield the levers of power as their predecessors did for generations beforehand. Besides as a more enlightened generation they would do this with even more wisdom. So it is unsurprising that they are not bloody happy to see the rules change. They are in charge. They set the rules. It’s their turn. It’s only fair.

Spot the odd one out.

Gordon Brown: 58. Peter Mandelson: 55. Michael Martin: 63. Barrack Obama: 47.

Age at start of mobile phone/internet mass adoption (1995)

Gordon Brown: 44. Peter Mandelson: 41. Michael Martin: 49. Barrack Obama: 33.

Clearly this is a generalization. Not everyone over 50, not every baby boomer is at odds with the changing world. In fact there are a fair number (many of whom we have to thank for building the technological foundations of this new age) who are leaders – in their actions and thought – in this transformation. However – and this is completely anecdotal and a personal view – I suspect that they are rarely found and disproportionately under-represented in the halls of traditional power.

It’s time for a change. But it won’t be easy. And given increasing life expectancies these guys are going to be around and healthy for another 20 or 30 years so nature isn’t going to help because we don’t have that long. The funny thing is I think if they overcame their fears and actually “let go” many of these leaders would find it incredibly liberating and empowering at the same time. Interesting times indeed.

(Call it.)

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On the importance of leadership.

Watching this compelling TED Talk – by The Bottom Billion author Paul Collier – over the weekend reminded me how important transparency can be in fostering better governance, and aloowing better leaders to emerge. This is as true for companies as it is for nations. His call for (voluntary) international standards in ‘best practice’ governance is intelligent and, probably more importantly, pragmatic:

And it catalyzed me to rewatch Patrick Awuah’s talk from TED Africa, that for me was one of the highlights of a unforgettable gathering. He states:

The question of transformation in Africa is a question of leadership: Africa can only be transformed by enlightened leaders…but when I speak of leadership, I’m not talking about just political leaders…I’m talking about the ‘elite’: those who have been trained, who’s job it is to be the guardians of their society – the lawyers, the judges, the policemen, the doctors, the engineers, the civil servants. Those are the leaders, and we need to train them right.

Watch this video and tell me it doesn’t make you want to do better. Appreciate more. Your parents. Your schooling. Your good fortune. Your leaders (however imperfect they may seem.)

I’ve often been asked why I am interested in developing nations, and Africa in particular. And, more to the point, how it fits in with the other main themes that define my blog. I guess it comes from an intense curiosity to on the one hand study, understand and learn from failure, and an fundamental belief that in failure and distress lies great opportunity. At the risk of sounding politically incorrect, it is not driven so much by compassion or the desire to ‘do good’ (although I would hope that I have at least the median amount of these attributes), but by a deep frustration and impatience with the wasted potential too often associated with these countries. It is also – and I hope you don’t think this makes me a bad person – driven by an enlightened self-interest. I am convinced that through gaining a better understanding of the failings and challenges faced in these societies, I will be smarter in the face of understanding any market, society or economy. I guess you could say it is part of the “you-learn-more-from-failure-than-success” canon.

One of the other primary themes I address on these pages is the power of traded markets. As regular readers would probably know, I have deep-seated conviction of the usefulness of markets in creating wealth and building stronger (more transparent) economies and societies. I also believe that some of the power of markets arises because they are fundamental to human culture and cognitive processes. Now I’m no anthropologist, nor sociologist, but (without any experimental robustness) I find that the emergence of fundamental market mechanisms in the most anarchic or chaotic societies – too often found in Africa, as proof that markets are fundamental to building working (even if pathological) human societies.

By becoming more knowledgeable about these markets and how to adapt products and services to be successful in what – a priori – are extremely hostile economic environments, I believe will generate many investment opportunities, primarily along two vectors: most obviously, within these developing markets themselves and, less obviously (but probably financially even more significant), by bringing learnings from operating in these markets back to developed markets and economies. Yes, I firmly belief that knowledge transfer can be a two-way street, not just one way from developed to developing economy. A good example is a company I recently discovered called Obopay:

Go mobile with your money. That’s the simple yet powerful idea behind Obopay.

Obopay is the first truly comprehensive mobile payment service in the United States. That means we’re the only service that lets you instantly get, send and spend money anywhere, anytime with anyone. With Obopay you can instantly pay back a friend, split a dinner bill, get money from your parents, get quick cash, pay up or collect on a friendly wager, track purchases, check your balance, and much, much more. And, you can do it all from your phone; anywhere, anytime with anyone.

The Obopay Story
Obopay is not your ordinary brainchild. It didn’t happen in a conference room or during a grueling brainstorming session. The concept for Obopay happened while Carol Realini, Obopay’s founder and CEO, was doing volunteer work in Africa. It was there she observed an interesting phenomenon: people living in some of the most remote corners of the world carried a mobile phone even if they didn’t carry a wallet. Combining the two seemed like an ideal marriage of empowerment and convenience. And that’s when the idea for Obopay was born. Returning to the U. S. she saw incredible opportunities within the ever-growing mobile youth market. Although Carol had not planned on rejoining the work force after a three decade run as a successful entrepreneur, her passion for this new idea changed her mind. She pulled together an all-star team of seasoned mobile and financial professionals, raised venture capital and successfully launched Obopay in 2005.

It sounds like Carol is (at least) two steps ahead of me! I’d better get back to work, if I want to have any hope of participating in future obopay’s…

On leadership

I believe in the Wisdom of Crowds. And I also believe in the value and importance of leaders and leadership. In fact in many contexts good leadership is what allows the crowd to be wise (as opposed to idiotic; see JP’s critique of Freedman’s article here.) The problem is a paucity of good leaders, or at least good leaders who can be bothered to wade through the venal and cynical thicket that all to often surrounds positions of power or influence. History is littered with disastrous outcomes due to poor leadership, we’re not just talking about a bad quarter or a bottom decile share price performance…

In his excellent book Collapse, Jared Diamond quotes from Barbara Tuchman‘s book “The March of Folly” :

Throughout recorded history, actions or inactions by self-absorbed kings, chiefs, and polticians have been a regular cause of societal collapses…Tuchman put it succintly: “Chief among the forces affecting political folly is lust for power, named by Tacitus as ‘the most flagrant of all passions.’ ” As a result of lust for power, Easter Island chiefs and Maya kings acted so as to accelerate deforestation rather than to prevent it: their status depended on their putting up bigger statues and monuments than their rivals. They were trapped in a competitive spiral, such that any chief or king who put up smaller statues or monuments to spare the forests would have been scorned and lost his job. That’s a regular problem with competitions for prestige, which are judged on a short time frame.

These are leaders that got caught up in their own press – that believed that the sun rose and set because of their genius and charisma. Leaders that eliminate dissent and fear change. Leaders that end up breeding a madness of crowds, crushing the wisdom under their iron determination.

I’m just in the process of re-reading Surowieki. And I can tell you I don’t really see him expounding on the virtues of blindly, and in all circumstances and contexts, trusting the ‘crowd’; and explicitly he underlines the fact that the wisdom arising from a crowd is not the same (indeed often just the opposite) as consensus.

(from “The Incredibles”

Helen (Dash’s Mom): Everyone’s special Dash.

Dash: [muttering] Which is another way of saying no one is.