Book Review: Only The Paranoid Survive

This time I opted for a classic of business literature. The book is called Only The Paranoid Survive and was written by former chairman and CEO of the Intel Corporation Andrew S. Grove.

When the book was published in 1996, both the internet and myself were in our infancies. I was finally made aware of Only The Paranoid Survive by a blogpost written by venture capitalist Ben Horowitz (@bhorowitz) entitled  Peacetime CEO / Wartime CEO. Horowitz (@bhorowitz) describes Grove as a typical "Wartime CEO".

Strategic Inflection Points
Drawing heavily on his experience as a CEO of the Intel Corporation Andy Grove outlines his idea of "strategic inflection points". These are the points in the life of every company when its business changes so profoundly that the whole company is at stake. Usually such changes are brought about by one of Michael Porter's (@MichaelEPorter) classix six forces: Competitors, suppliers, consumers, substitutes, potential competitors and complementors (for those familiar with the five forces, complementors have been added later). When such a forces changes its magnitude by roughly ten times ("10X Force"), you can be sure, you are facing a strategic inflection point.

Recognizing a Strategic Inflection Point
It is not always easy to recognize a strategic inflection point. After all, if everybody recognized them early on and was well prepared business journals would probably face serious issues. Grove argues that the only way to surely recognize a strategic inflection point is through broad and intensive debate. As a board member listen to striking news from your frontline employees and your salesforce, as an employee or middle manager report oddities early on and if your gut feeling says there is something in the dark, listen to it; after all your gut feeling might save your company. Gather data to analyze the situation early on and try to stick to the facts despite the countless emotions involved in every big change.

Navigating a Strategic Inflection Point
Andrew Grove sees navigating a strategic inflection point as a two-stage process:

Stage 1: Experiment: While you may not know the answer, someone in your company might know, or at least someone might be able to find out. Provide room for experimentation and let failures happen at an early stage of a strategic inflection point. Failures are much cheaper now than later. Sometimes you might also want to hedge different strategies or keep watching an emerging technology.

Stage 2: Set the direction: After you have experimented enough to reach a sensible conclusion, go for it with all the conviction you can afford. After a period of 'chaos' it is important to set a clear direction and move towards the end of a strategic transition even if you might not be sure how exactly the company will look afterwards. Grove describes this very imagniatively:

"When I think about what it's like to get through a strategic inflection point, I'm reminded of a classic scene in old western movies in which a bedraggled group of riders is traveling through a hostile landscape. They don't know exactly where they are going; they only know that they can't turn back and must trust that they will eventually reach a place where things are better."

This book may be judged 'old' by conventional standards and chapter 9, in which the author discusses whether the internet is a strategic inflection point or just noise is rather funny to read with all we know by now. However, the theory of strategic inflection points is still very up-to-date and important. Only The Paranoid Survive is an insightful, fascinating and quite short read that is definitely worth your time!

Currently, I am reading The Moral Landscape by Sam Harris (@SamHarrisOrg). Follow me on Twitter and share your thoughts!

Book Review: The Information

The Information by James Gleick (@JamesGleick) has gathered a lot of attention, for example here and here. I read it too, here's my review.

With The Information, James Gleick (@JamesGleick) offers a thought provoking overview of the roots and of the inner workings of the information age. He subtitled his book "A History, a Theory, a Flood".

A History
Starting with the analysis of information conveyed with talking drums in Africa, James Gleick (@JamesGleick) outlines the history of information from dictionaries to quantum computing. His profound research and imaginative writing style makes it easy to follow the meandering path of information from its very beginning to the 21st century, passing the Oxford English Dictionary, the telegraph and the differential analyzer.

A Theory
Complementing this dive into history is an overview of the most important concepts of information theory. Ranging from Norbert Wiener's cybernetics - a personal favorite of mine - to Richard Dawkins' (@RichardDawkins) meme - another favorite - and Maxwell's Demon. While the book covers most of the important information theories, it could have been somewhat more detailed here and there at the cost of the historical explanations. But this is just my personal taste.

A Flood
Information theory has stripped meaning from information and left just a series of zeros and ones to be analyzed by mathematicians and computer scientists. But due to the flood of information we are supposed to cope with in our daily life, meaning can no longer be discarded as "irrelevant to the engineering problem". While the book closes with the idea that meaning will find its way back to information theory, the definite answer is still to be found.

The Information is both, a great read for your holidays as well as a reference book for the theory and the history of information. It is an easy read and more of a tale than a science book. Overall, a great companion for your holiday travels.

Currently, I am reading Andrew Grove's classic Only The Paranoid Survive. Follow me on Twitter to know about the book reivew.

Book Review: How the Mind Works

Finally my next book review. It is really a long book, so it took some time :-). It is How the Mind Works by Steven Pinker.

This is probably the definitive book on the computational theory of mind paired with natural selection. Being one of the most eloquent, wittiest and most successful psychologists and neuroscientists of this age, Steven Pinker outlines his thoughts with startling precision and a sense of good humor. Let’s have a look at the two big building blocks of his theory

The Computational Theory of Mind
Information processing is the central activity of our brains. Basically our mind consists of mental representations, which are the symbol representations used by the mind. These representations can in turn be accessed by our thought processes.

Our mental representations are the inscriptions of things, concepts and ideas in our mind. They are connected in our neural network. Different connections use different connection weights. By this mechanism we can determine that a horse, a pig and a bird are all animals but “horse” and “pig” are more strongly connected to each other than to “bird” and they also belong to the mental representation of “mammal”. This is done by simple statistical operations and can be modeled in traditional neural networks. Departing from classical connectionism Steven Pinker further proposes a hierarchical “layer-structure” in our mental representations. This structure allows us to perform difficult tasks such as quantification, recursion or the implementation of fuzzy logic.

Natural Selection
Natural selection is pretty straightforward. Whatever makes a living organism successful at reproducing itself is reproduced the most and is therefore most likely to be found in subsequent generations. As a result, most if not all of the features of our body or mind are here because they have been essential for survival or reproduction to our ancestors. This includes everything from stereo vision to sex drive (which differs from females to males in most species) or family values. Natural selection allows us to explain why the mind works as it does.

The Other 350 Pages
The computational theory of mind and natural selection are just the building blocks of Steven Pinker’s explanation of the human brain. In the rest of the book, he continues to apply these concepts to everything from vision to intelligence, emotions or family values. It is a tremendous read and I can highly recommend it to anyone interested in neuroscience or psychology!

How the mind works was published back in 1999, so it might be that some of its insights are not considered state-of-the-art science anymore. Generally though, the book was able to withstand the test of time and I am not aware of any claims in the book that have been refuted by now.

Currently, I am reading Sartre's Nausea. Follow me on Twitter to hear what I think about it or discuss any other book!

Book Review: Enchantment

Another book review: This time it is Enchantment: The Art of Changing Hearts, Minds, and Actions by Guy Kawasaki (@GuyKawasaki).

First things first: I am not going to compare Enchantment to Dale Carnegie's How To Win Friends and Influence People. This has been done in countless other reviews. So far all of you who have not read Dale Carnegie's book (I have neither) here is the review:

A Cookbook for Enchanting People
Guy Kawasaki (@GuyKawasaki) provides us with a variety of hands-on recipes - a successful relief from the theoretical high-level approach pursued by many other books. While the chapters form a consistent storyline (from "Why Enchantment?" and "How to Achieve Trustworthiness" to "How To Use Push Technology" and "How to Enchant your Employees") the advice discussed in the respective chapters ranges from one-to-one interactions to delivering a presentation like Steve Jobs  or managing a Twitter account like Guy (@GuyKawasaki).

One example is on page 24 where it is recommended to "Default to Yes". In other words, always agree to help people with their requests and do not say "no". My personal note to this bit of advice would be: Before you default to yes please learn to say "no". From time to time an appropriate "no" can save you from big troubles.

Thourough Research
What I  enjoyed most about Enchantment were the various references to research dealing with human behavior and perception such as the explanation of the social proof effect, which is the concept that "if other people are doing something, then it must be OK, right, cool, and maybe even optimal" (p. 72). There are many similar examples spread throughout the book and they are applicable to a myriad of situations you might encounter sooner or later.

The Small, Enchanting Stuff
It is not just the content of the book that makes it a good read. It is also how Guy Kawasaki (@GuyKawasaki) presents it. Throughout the book we find various quotations and every chapter ends with a very personal 'enchantment story'. In the end Guy even presents "Guy's Realistic Enchantment Aptitude Test (GREAT)" to test your knowledge of the book. These are textbook examples of how to invite readers to immerse themselves into a story. In this case the great story of enchantment.

You can find more information about Enchantment: The Art of Changing Hearts, Minds, and Actions here, here and here. It is definitely worth the read!

Currently I am reading How the Mind Works by Steven Pinker. Follow me on Twitter to know if it is any good.

Book Review: Brainsteering: A Better Approach to Breakthrough Ideas

I just finished reading Brainsteering: A Better Approach to Breakthrough Ideas by Kevin P. Coyne and Shawn T. Coyne. Here's the review!


Every now and then I get my hands on a book and I cannot stop thinking about that maniac who allowed that book to be published. Brainsteering is such a book. Not because it is bad, but quite the opposite: It discloses the results of a major McKinsey initiative and provides a systematic procedure to generate fresh ideas. Forget about those lame brainstorming sessions, the Coyne Brothers have the real thing!

The Bad News: Brainstorming Sucks
You know it, I know it, finally science knows it too, so maybe it is time to tell your boss: Brainstorming is crap! The concept of brainstorming relies on the idea that we have a left side of the brain, which is analytical and a right side of the brain, which is creative. In a brainstorming session you should supposedly be able to turn off your left side and only work with your creative brain. However, nowadays it is accepted that this is not how our brain actually works. Instead, analysis and intuition work together in all modes of thought.

The Good News: Brainsteering Doesn't
The brainsteering approach developed by Kevin and Shawn Coyne is much better adapted to how our brain actually works. Instead of provoking a free flow of undirected ideas it looks for the right questions and imposes constraints on the problem at hand in order to stimulate our thinking. Examples of how to use such constraints to spark creativity can be found in a revealing article from the McKinsey Quarterly (@McKQuarterly).

Brainsteering in a Nutshell
The brainsteering approach was featured in another McKinsey Quarterly (@McKQuarterly) article. In a nutshell, it encompasses seven steps:

1. Know your organization's decision-making criteria
2. Ask the right questions
3. Choose the right people
4. Divide and conquer
5. On your mark, get set, go!
6. Wrap it up
7. Follow up quickly

For more information on how exactly to perform those steps refer to the article in the McKinsey Quarterly (@McKQuarterly) or to the book. It is absolutely worth it!

Currenty I am reading Enchantment by Guy Kawasaki (@GuyKawasaki). Follow me on Twitter and I will let you know of the next book review!

Book Review: Wired for Thought

Here's my latest book review for Wired for Thought: How the Brain is Shaping the Future of the Internet by Jeffrey M. Stibel (@Stibel). Let me share some thoughts about this extraordinary book.

Brain scientist and Internet entrepreneur Jeffrey M. Stibel (@Stibel) presents a provoking hypothesis: “The Internet is a brain. By this I mean that the Internet is more than a reflection of intelligence; it actually manifests intelligence.”

What the book is not

Wired for Thought is neither a grand unifying theory nor a comprehensive explanation of everything you need to know. Not with respect to the Internet and not with respect to the brain. Stibel (@Stibel) eloquently connects some of the dots that form his seemingly far-fetched hypothesis. Yet, there are too many dots for a book with roughly 200 pages and the interested reader is left with many unanswered questions. Indeed, Wired for Thought is not the holy book of the Internet, yet it is inspiring – tremendously inspiring.

“The Internet is a brain”

Let me give you one example, inspired by Jeff Stibel’s (@Stibel) book, which will show you how the Internet is like a brain. Consider the words apple, mobile and cell...

If you are now thinking of the iPhone you mastered a task that is too hard for most computers. You realized that apple refers to a company rather than a fruit and mobile and cell are short forms of mobile phone and cell phone, respectively. What happens in your brain is that a set of neurons is activated and this set of neurons is connected to the set of neurons representing the idea of the iPhone. Consequently, these neurons are activated too and you come to think of iPhone. That sort of intelligence is what makes us intelligent and computers – well, computers.

Entry of the Internet: The Internet has that form of intelligence. If you follow hyperlinks containing apple, mobile and cell you will eventually hit a website with information on the iPhone. Advanced search algorithms are even able to recognize that you might be looking for an iPhone by crawling through the pattern of hyperlinks. These hyperlinks are the dendrites of the Internet and the websites are its neurons. The structure of the Internet eventually resembles the structure of the brain.

Are we doomed?

OK, the Internet is a brain. Are we doomed? Will it hook our brains up to machines and create a matrix-type of future? Fortunately not. But Stibel’s (@Stibel) book does provide us with some insight about the evolvement of the Internet, its strengths, weaknesses and its eventual limits. While I cannot write about all of these insights here I have discussed the limits to network growth in an earlier blogpost. If this does not satisfy you, get the book! It is a great read and definitely worth your time!

Currently I am reading Brainsteering: A better approach to breakthrough ideas by Kevin P. Coyne and Shawn T. Coyne. Follow me on Twitter to get the news about the book review!

Identifying the Limits to Network Growth

This article draws heavily on ideas from Jeffrey M. Stibel's (@Stibel) book Wired for Thought: How the Brain Is Shaping the Future of the Internet. I will write a book review in the next few days. However, the ideas presented here are too broad to be discussed in the review only.

Let's have a look at the growth of networks, be it the internet, the neural network of the brain or the social network of your friends and family members (online or offline). Metcalfe's law - formulated by Bob Metcalfe (@BobMetcalfe) - states that the value of a telecommunications network is proportional to the square of the number of connected users of this network (n^2). While this law has been critized by several authors (e.g. here), its general idea has proven to be quite robust in the course of time despite postulating unlimited growth.

However, Metcalfe (@BobMetcalfe) asked in a 2006 blogpost whether this is actually true. It might be the case that the value of a network actually starts going down after some size. This is exactly what Jeff Stibel (@Stibel) proposes when he writes:

My theory is that Metcalfe's law works until a network reaches the point of critical mass. But at that point - where cost exceeds value - the value curve stops increasing. The value curve almost inevitably follows the cost curve from that point forward. (p. 113)

He reasons that this critical mass is determined by a wide range of external factors that determine something that might be termed "carrying capacity". For an ant colony (which is basically a network) such a factor might for example be food availability. If Stibel (@Stibel) is correct and such a carrying capacity exists for the internet, we can use systems theory to give an idea of how this slowing down of growth might happen:

Systems facing a carrying capacity constraint usually exhibit S-shaped growth. In their beginnings they are dominated by economies of scale and grow at an ever increasing rate (similar to Metcalfe's law). However, when their size approaches the carrying capacity and resources become scarce, growth slows down and the system eventually settles in an equilibrium (for a generic explanation of the S-shaped growth behavior visit the website of the System Dynamics Society).

It is quite difficult to forecast such S-shaped growth patterns because a number of mathematical models can be used (e.g. the logistic model or the Gompertz model), that might fit historical data equally well. However, it is particularly important to pay attention to the inflection point, at which the growth rate starts to decrease. Furthermore it is important to identify the factors determining the carrying capacity of a particular network.

The identification of these factors can not only improve the valuation of internet companies which might prevent another dot-com bubble; it can also help to extend the carrying capacity of the internet and to ensure its continuous growth. Any ideas on what these factors might be?

I will soon publish a more comprehensive review of Wired for Thought: How the Brain Is Shaping the Future of the Internet. Follow me on Twitter and I will let you know!