The following excerpt is the prologue of David M. Snick's The World is Curved: Hidden Dangers to the Global Economy, which is being released today. The book has received praise from some heavy hitters in the world of politics and global economics, such as Alan Greenspan, George Soros, James Schlesinger and Bill Bradley. Former Secretary of the Treasury Lawrence H. Summers states:
David Smick understands, as few do, that international finance depends on politics and passions as much as on policies. Agree or disagree, his sense of where we have been and where we are going deserves close attention. He writes in a way that makes giving close attention a pleasure.
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t was not without enormous frustration that I approached writing a book about today's new global economy. After all, what do we make of a world financial system that one minute appears to be performing beautifully, and the next acts as if the world is coming to an end? One minute the cybernetic (computer) revolution has transformed the economy into a veritable global wealth machine, as stock markets around the world soar to new highs. The next moment, markets plummet. People then read newspaper stories suggesting the value of their home may soon be less than their mortgage. They discover that their family's life savings--even their cash left in supposedly ultrasafe money market funds--could soon go poof in the night.
In trying to fully grasp the significance of the new global system, I began by rereading the seminal book on the subject of globalization, Tom Friedman's bestseller The World Is Flat: A Brief History of the Twenty-first Century. Friedman compellingly describes globalization as it is, with concentration on the global supply chain for goods and services.The stories are mesmerizing--taking the reader from India's Silicon Valley in Bangalore to villages in northeastern China. Friedman's book describes how digital technology shortened the distances between countries and revolutionized the global supply chain. This permitted people to engage in business with one another across the globe, with each nation bringing its comparative advantage to the table of world commerce. An award-winning columnist for The New York Times, Friedman wisely warns that the U.S. economy must adapt to this new and changing environment or retrench economically. The book stands as a historic achievement in introducing a broad audience to the new world of opportunity and challenges beyond national borders.
After rereading The World Is Flat, I had lunch one day at the Hay-Adams Hotel in Washington, D.C., just across from the White House, with an old friend, John Despres, who had been Democratic U.S. senator Bill Bradley's longtime foreign policy guru. "John," I said as we were being seated, "I am trying with great frustration to get my arms around globalization. Frankly speaking, from the perspective of the financial markets, the world is not flat. Unlike the world that produces goods and services, in the financial world nothing happens in a straight line. Instead, there is a continual series of unforeseen discontinuities--twists and turns of uncertainty that often require millions of market participants to stand conventional wisdom on its head. In the financial world, John, nothing much seems to happen in a straight line."
A pensive man in his sixties who chooses his words carefully, Despres sat there thoughtfully. He stroked his chin, pondering as he gazed off into the distance past Lafayette Park to the front columns of the White House. "So what you're saying," he slowly began, pausing for several more seconds, "is that the world is not flat; the world is curved."
"Yes," I responded, "for the financial markets, the world is curved. We can't see over the horizon. As a result, our sight lines are limited. It is as if we are forced to travel down an endless, dangerously twisting and turning road with abrupt steep valleys and risky mountainous climbs. We can't see ahead. We are always being surprised, and that is why the world has become such a dangerous place."
By way of background, financial markets have always been plagued by uncertain and incomplete information--a lack of transparency. There have always been things that investors and traders didn't and couldn't know. But in the new global economy, this crazy ocean of global liquidity has not only increased the number of unknowns but also rearranged their relationships and relative importance.
There are new players with new perspectives. All of a sudden, a huge pool of funds is competing around the world for investment opportunities. Bankers, businesspeople, and governments in industrialized economies are now competing with entrepreneurs, start-ups, and old state-controlled companies in emerging economies to attract those funds. With new kinds of securitized debt, mezzanine investing, and outrageously complicated financing instruments, it is almost impossible to figure out what is going on at any give time. Investors need new kinds of information to make good decisions. But exactly what kind of information is that? And where do they get it?
Financial markets have always operated on inequalities of information and analysis. You think or know A. I think or know B. But today's policymakers and market traders must depend more than ever on their gut instincts. The playing field is bigger, the stakes are higher, and the system, because of its size and complexity, is unbelievably fragile. It is a house of cards that could come tumbling down for any number of reasons. That won't necessarily happen, but politicians and policymakers need to be careful. They need to start caring about things that never much mattered to them before.
After all, what do we really know about what is about to unfold in China, which has an economy that even its own leadership cannot fully understand? What do we know about the mind-set of the Japanese housewife who, as strange as it sounds, plays a huge part in the direction of the flow of the world's savings? What do we know about the accuracy of the accounting ledgers of even our largest, most trusted financial institutions or of the sophisticated financial instruments these firms deploy? What do we know about the long-term strategic implications of today's excess savings being controlled by nondemocratic governments? And what are the social and political implications of global wealth being so unevenly distributed?
In addition, the markets lack information about what may be the most critical issue of all--whether the trend of globalization itself will be allowed to continue. The politics of globalization are heating up fast as the anxiety produced by the power of free-flowing capital and goods skyrockets. Amazingly, a recent Wall Street Journal/NBC poll revealed that in the United States, by a two-to-one majority, even Republicans believe free trade is hurting America. The troubling turbulence of the subprime-driven Great Credit Crisis of 2007-2008 hasn't helped matters either. It is the latest rallying cry for the antiglobalization forces gathering on the horizon.
"Perhaps most troubling," I said as our lunch concluded, "is that most people today lack a historical perspective. The boom period is being taken for granted. Median-age American voters today were born in the mid-1960s. They have no recollection of the stagflation and long gas lines of the 1970s, the period before today's globalized economy. They have never known anything but a highly productive economy, with impressive stock markets and ample jobs. Many key constituencies of globalization have been lulled into complacency. Therefore, the period ahead will be one of potentially imprudent, overly reactive policy change.
"To top it all off," I stressed to Despres, "policymakers don't appreciate the fragile nature of today's global financial system and how financially induced prosperity can stealthily slip away through the unintended consequences of well-intentioned policy actions that attempt to legislate or regulate economic security. Today, we find ourselves in a situation in which the globalized financial system both enables and threatens our national well-being."
I concluded by suggesting that Friedman's book brilliantly presents the first installment of the globalization story, but there is a second installment as well--the financial side of the story. That's the subprime side where, for example, a small village in Arctic Norway can see its entire financial future destroyed because its financial managers invested heavily in a Citigroup product called a collateralized debt obligation. When the housing markets an ocean away in Florida and California collapsed, the debt obligations soured, and the Norwegian village had to shut down kindergartens and health care services for the elderly.
At the end of our conversation we turned to history, agreeing that nothing about the world's current political, economic, and financial predicament is new. Indeed, today's world economy bears a striking resemblance to the integrated markets and overwhelming prosperity of the period from 1870 to 1914, which noted economist John Maynard Keynes described as "an extraordinary episode in the economic progress of man." That, too, was a period punctuated by continual financial crises--and also of great prosperity. Ironically, today we ask the same questions as they did in 1914: What does it take to sustain this new, successful global economic system? What policymaking perils could reverse this wealth creation? Stagflation? Deflation? Protectionism? What unexpected financial explosion or implosion could create waves--curves--that the world remains unprepared to handle except through trade wars, strict capital controls, and other beggar-thy-neighbor policies--all policy blunders resulting from human error?
Today's industrialized world wants the Chinese to better manage their currency but remains unsure of the precise policy prescription or even of the capabilities of the conflicted Chinese leadership. The world hates America's twin budget and current account deficits, but no one has yet figured a safe way out of them. Nor does it seem like an answer will come any time soon. Much of the world's excess savings sits in the hands of nondemocratic regimes, led by China, and the oil producers, including Russia, but what this portends for the future, nobody knows. The Federal Reserve, in coming to the rescue of the investment firm Bear Stearns in March 2008, appears to have provided a government guarantee of the investments of the entire financial sector, not just the banks. The long-term implications for regulatory oversight, and thus the level of lending, under this new policy are anybody's guess. We live in a globalized world where we have to care much more about one another's problems, while simultaneously solving
our own.
In his book, Friedman warns American policymakers of the need for tax credits, improved teachers' salaries, and novel approaches to creating, attracting, and retaining the new creators of value--the engineers. Yet retaining the free flow of capital to keep globalization's bloodstream pumping may also require the most sophisticated team of global financial brain surgeons. That is because the world today lacks a financial doctrine, or even much in the way of a set of informal understandings, for establishing order in a financial crisis. Instead, we have to grope and manage incrementally, like trying to perform delicate brain surgery with one hand tied behind our back and the other wearing an ill-fitting boxing glove. The financial markets have simply become too big, and at times too threatening, for our governmental institutions to be fully effective in maintaining stability.
The 1870-1914 period, eerily similar to what we face today, met a bitter new reality with the opening shots of World War I. Within a decade and a half, capital and trade flows collapsed, which helped set the stage for the Great Depression. Today one of the world's prominent global monetary policy theorists, and a governor of the Federal Reserve, Frederic Mishkin, argues ominously that "the possibility of another Great Reversal is very real." Martin Wolf of the Financial Times writes that "the breakdown of the early twentieth century occurred, in part, because of the pressures to accommodate rising powers in the global economic and political order." He suggests that today's rise of China and India will create comparable pressures--"a spiral of mutual hostility that undermines the commitment to a liberal international economic order."
Of course, the world won't cast some dramatic veto to end the current system as we know it. The industrial world financial markets have garnered too much political power for that to happen. Reversals seldom come in one cruel, visible, planned policy blow. Instead, like death from a thousand cuts, they come from a series of small, seemingly benign, but dangerously destabilizing changes that reach a terrifying tipping point of market uncertainty and fear. That is what happened during the subprime crisis, and today we are increasingly at risk of further financial calamities that threaten a vicious spiral of destruction and heartache.
I undertook the task of writing about this complicated system we call the new global economy because I have had a front-row seat, and probably played some modest role in its creation. Over my thirty-year career, I have watched the forces that created financial globalization unfold, and I have consulted regularly with some of the major players in the field of global finance. I feel obliged to share what I have learned with those who have not been afforded such access.
Over the years, I first served as the chief of staff to a senior member of the U.S. congressional leadership, and then as an adviser on economic issues to both Democratic and Republican presidential candidates. For the last twenty years, I have worked with some of the world's most successful money managers, including George Soros, Michael Steinhardt, Louis Bacon, Stan Druckenmiller, and Julian Robertson, through my global macroeconomic advisory firm Johnson Smick International (previously called Smick Medley and Associates). We serve as specialized quasi journalists--like a paid cable TV service compared with free network television.
In addition, I founded and continue to edit The International Economy, a magazine geared to the global central bank and finance ministry community. I also conceived and organized the U.S. Congressional Summits on the Dollar and Trade, a series of important conferences in the late 1980s and 1990s involving the world's finance ministers, central bankers, and the U.S. congressional leadership.
For two decades I have interacted daily with the most senior economists and most visible market traders on the front lines of financial globalization. They have all been grappling with the same issue: how to survive and prosper in this troubling new system.
In January 2007, more than six months before the outbreak of the subprime crisis, I commented one evening to the other guests at a Washington dinner party that "the average person today would be shocked to know how much the global financial system, though robust, faces a potential risk to its own survival. It is vulnerable to a psychological herd effect that could wreak havoc with the industrialized world economies." On the drive home from the dinner party, my wife, Vickie, remarked, "You should write a book on the subject. If the central bankers and Wall Street know what's behind the curtain, why shouldn't everyone else? Why don't you say what all the big money players already know about how these uncertainties could affect all of us?"
I therefore credit my smarter half for recognizing the need for such a book, and for providing the needed spark that motivated me to take on this project.
Excerpted from The World is Curved
copyright © David M. Smick, 2008
Published by Portfolio, a member of Penguin Group (USA) Inc.
To continue, pick up a copy of this book here.
The following excerpt is taken from Chapter 1 of Leadership and the Sexes: Using Gender Science To Create Success In Business by Michael Gurian and Barbara Annis. In this new book, Leadership and the Sexes gender experts Michael Gurian and Barbara Annis show what the latest scientific studies reveal about male/female brain differences, and explain how these differences impact the ways that men and women negotiate, communicate, lead, and run meetings.
Chapter 1: Understanding the Science of Gender
Human evolution has created two different types of brains (male and female) designed for equally intelligent behavior.
Richard Haier, Professor of Psychology, UC Irvine
It can be difficult today to talk completely and honestly about how men and women feel at work. Respectful humor is often helpful.
A number of years ago, a story began to circulate on the Internet. Some people thought it began with Stephen R. Covey, though no one knows for sure. It is a fictional transmission between a U.S. Navy aircraft carrier and Canadian authorities that provides us in the gender world with a humorous metaphor for beginning a dialogue. We get a special chuckle from this story because Barbara is Canadian and Michael is American--but the story could involve any countries and any cultures.
CND: Please divert your course 15 degrees to the south to avoid collision. USA: Recommend you divert your course 15 degrees to avoid collision. CND: Negative. You divert your course 15 degrees to avoid collision. USA: This is the captain of a U.S. Navy ship. Change your course now or countermeasures will be taken to ensure the safety of this ship. CND: This is a lighthouse. It's your call.
A lighthouse and a ship--they both have something essential to offer. At first, neither one understands what the other one is. Once they understand, perspectives change.
Is the lighthouse one gender and the ship another? No. For our purposes, the lighthouse represents human nature (gender), and the moving ship represents cultural shifts in use of gender (gender roles). In the science-based paradigm, gender comprises the male/female characteristics we are born with and the context in which we receive our early nurturing; gender roles are the roles that our society and we ourselves decide we should fulfill as women and men.
In this model, the lighthouse is "hard-wired"--it's been there a long time. The ship can't deny the lighthouse exists, nor change the "course" of the lighthouse--and, perhaps most important, it needs the light shining from the lighthouse to help chart its safe course. Though the ship initially feels threatened by the presence of the lighthouse (not knowing what it is), once it learns the character and value of this other presence, it can in fact navigate more safely.
The moving ship is the "soft-wired," changing part of the gender equation. The ship represents the gender roles we each bring to the workplace. These can change from generation to generation and from person to person.
When the ship doesn't have all the information the lighthouse possesses, our sense of gender roles, as individuals and a society, will often limit either women or men, increase gender stereotypes, misrepresent who we are as individuals, and lead to confusion, fear, and, ultimately, anger and anguish. When, however, the ship acquires crucial information about human nature--gender--it realizes the lighthouse is there, and it can more safely and more effectively navigate gender roles, gender issues, executive team development and trust, individual and personal concerns between women and men, and the whole workplace culture.
The excerpt below is from Allen Adamson's BrandDigital: Simple Ways Top Brands Succeed in the Digital World. It is excerpted from Chapter 10, "Start with a Simple Idea."
Allen certainly believes in branding simplicity... his first book was BrandSimple: How the Best Brands Keep it Simple and Succeed. Read on for the "four criteria by which a good brand driver can be judged."
The best brands on the planet know the importance of basing their promise and their branding on a simple, relevantly different idea. However, the fact that it's relevantly different will become irrelevant if you cannot capture this simple idea in a blatantly clear and evocative brand driver. The fact that an idea is simple is also simply not enough. To generate branding that expresses everything you want consumers to associate with the brand, your brand driver must be intuitive enough for everyone doing the branding to understand and sticky enough for them to pass along while keeping its intent intact. Branding today is not linear: it's everywhere. A succinct, sticky, intuitive brand driver will ensure that your branding will be easily understood by those doing the branding and those influenced by the branding: the consumers. There are four criteria by which a good brand driver can be judged. To make it a snap, they all start with the letter S.
1. Simple. A brand driver must be, above all, simple in nature. It must capture the essence of the brand's promise in a way understandable, if not explainable, by a fifth grader. This is not a simple task. It's not that people aren't smart. Quite the opposite. It's that it's very difficult to get a roomful of smart people to agree on the one word, the one thought or notion that captures the essence of the brand. The very dynamics of big business, small business, any business with more than three people works against you. Group decisions are tough. The bigger the room, and the more people in it, the harder it gets. One exercise that we use with clients at Landor to meet the criterion of "simple" involves building a "story pyramid." You begin this exercise by having the group members write single words, or singular thoughts or notions about the brand's attributes or characteristics on index cards. The first task for the group is to determine which index card contains the word or notion that best conveys the point of the brand "story." This exercise will force the team to make hard choices. And that's okay. Establishing a brand driver requires making hard choices. Your brand can't stand for everything. Your goal is not to end up with a run-on sentence. The second task for the team is to use the remaining cards to build the supporting argument to the story in ascending order; to demonstrate why the idea on the pinnacle of the pyramid deserves to be on top. A good test of whether you've succeeded in your efforts is to run the idea by that fifth-grader. If the kid says, "Oh yeah, I get it!" chances are everyone else will, too. On the other hand, if the precocious kid asks, "So, what's your point?" your simple idea simply isn't ready for prime time.2. Specific. If you tell me your brand is innovative, I'll ask you to be more precise; "innovative" in what way? When you use boilerplate words like "innovative" to describe a brand, they can be interpreted any number of ways. The words you use in a brand driver must be absolutely unambiguous in meaning and clear in intent. Because it can be very difficult for people to articulate something as precisely as necessary, we often use pictures to help our clients get to the specific word they're after. Visual cues can assist people who are trying to capture the difference between innovative as in a paper clip, and innovative as in the Click Wheel on an iPod. Another exercise to help people be more specific in their articulation of an idea is to have them express it in a book title or a movie poster. A similar exercise is to have them write a headline for an ad that succinctly and accurately captures the intent of the idea. You'll find that exercises like these help people self-edit. Once people learn to think beyond the obvious, they'll be able to hone ideas to their core.
3. Surprising. If something is surprising, it's easy to remember. Buzz words and jargon are forgettable. That's why brand drivers or mission statements filled with buzz words and jargon are often laminated or framed to hang on office walls. People forget what they say. The objective of a brand driver is to be memorable. By giving your brand driver a clever or surprising twist, it will be easy for people to remember and it will live and grow organically within the organization. A good brand driver is meant to inspire people. If it's not inspiring on its own, it will never intuitively lead to appropriate and brilliant branding executions. To determine whether your brand driver is memorable enough not to have to be laminated and framed, tell a random group of people in the organization what your intended brand driver is. Go back the next day and ask them to recite what you've told them. If the words you hope to hear trip liltingly off their tongues, you've got it. If they don't, go back to the drawing board.
4. Story-worthy. In my last book, BrandSimple, I wrote about British Petroleum which, after changing its name to BP, became associated with the phrase "Beyond Petroleum." These two simple words tell a story. If you were to write a story about an energy company that's about more than petroleum as an energy source, it might include content about solar energy or wind energy. Being about more than petroleum as an energy source implies that the company looks for new and innovative ways to power the world. Being an innovator in this respect means the company would most likely be an innovator in other respects: in the way it runs its retail establishments, treats its employees, builds its own buildings, does its advertising, or supports philanthropic organizations. A brand driver must be inspirational to the people who do the branding. To see if it is, get folks together and have each of them write a story about the brand driver and what it implies about the company. The objective is to see if they pick up the key factors. Use these stories to see if people "get it." If they do, the branding should be right on.
Excerpted from BrandDigital
Copyright © 2008 Allen P. Adamson, 2008
Published by PALGRAVE MACMILLAN
