25 pages a day - Feb 2018

This month's list

When Genius Failed: The Rise and Fall of Long-Term Capital Management

This was recommended in the footnotes of An Intelligent Investor which I was reading last month (January, 2018). The author provides a window into the secretive lives and ballsy albeit short adventures of the partners in the hedge fund Long Term Capital Management.

LTCM, which comprised of Nobel laureates and other geniuses, made a whole lot of money with a lot of leverage and then lost it all, almost bringing down several banks and the financial system along with it in a span of 4 years. I like the way the author gives a little bit of background on John Meriwether, the man at the centre of it all, and some of the partners, before going into the details of the fund itself.

It's an enthralling read, and it could be better, I feel, if I had better knowledge on the basics of financial markets and the instruments they deal in. The author makes it a point to explain, in simple language, several of the terms and concepts (such as arbitrage, swaps, spreads, etc) when first mentioning them, but I think it would be a better read if these terms and concepts were second nature to me. The more you understand, the more you appreciate.

The Toyota Way

I mentioned this one last month, having read a small part of it. I may have been quick to judge. I've heard words of praise for Toyota from a car enthusiast friend and this book provides the explanation. Every organisation takes about culture and core principles, but few put their money where their mouth is. Toyota has been doing it for decades. The founders and top personnel believed in a set of principles, ways of getting things done, and made sure everyone around them did the same. Promoting from within, they made sure their successors believed and followed these principles as much as they did. Rinse and repeat. What you end up with is a global organisation with astounding manufacturing efficiency and reputation for being one of the most reliable car manufactures on the planet. More important than the principles themselves is the ability to stick with them through thick and think.

The author mentions other organisations attempting to copy the processes Toyota follows, without making it a part of their culture, without buy-in from top management, in hopes to achieve the same gains in efficiency. It doesn't work, even if it does it doesn't stay that way for long. Sooner or later, they are back to square one. If you work in manufacturing and have even the slightest influence on the floor, this book can prove to be of great benefit.

I work in a startup, one that provides software based services. I read this book hoping to find something to help ship quality products on schedule. What I learned is that blindly attempting to apply these principles will not work, even if you do it well. I will need to start from scratch, picking those that apply to me, modifying them to fit this specific industry. I don't believe software is much more complicated than hardware. I feel the industry is relatively young and slightly undisciplined overall, and perhaps in half a century's time, whoever still maintains the quality they have today, will have an interesting story to tell.

Bargaining with the Devil: When to Negotiate, When to Fight 

I found this one also in the footnotes of one of my favourites from last month - Getting To Yes, by Roger Fisher, who is one of the co-founders of the Harvard Negotiation Program. The author of this book, Robert Mnookin, can be said to be his successor, and the current chair of the same program. This book is a great lesson in history, logical reasoning, and human relationships. The author provides a framework at the start of the book, one that will assist you in making the decision of whether or not you should negotiate. He discusses traps, which can be described as ways of thinking, that can lead, confuse, distort your thinking into leaning towards either of the ends (to negotiate and not).

The author then describes several stories where the protagonist (or a group of people) figure out how to "deal with the devil", if at all. The stories include that of Anatoly Sharansky and the Soviets, Rudolf Katzner and the Nazis, Churchill and the War Cabinet, IBM and Fujitsu, Nelson Mandela, the ANC, and the South African Government, musicians and management of the San Francisco Symphony, and a few more of personal disputes including divorce, estate settlement, etc. The author is personally involved in a few of them, and ends each story with an assessment of whether the characters involved were right in choosing to negotiate (or not) with their counterparts, and what he would do differently, providing ample reasoning. This books answers some of the questions at the end of the "Getting To Yes" in much more detail.