What happens when you give away unlimited power?


What happens when you give away unlimited power?

According to different estimates, Americans give anywhere from $200BN – $300BN+ each year in charitable giving each year. According to this source, the United States donated slightly more than $316BN in 2013, with a year-over-year increase of about 3.5%— more than twice the level of inflation.
 

That’s a big number, and a relatively unique one as well. According to the World Giving Index, Americans are among the most charitable nations on the planet, ranking fifth out of 160 countries surveyed in 2012. (In case you’re wondering, the US followed Australia, Ireland, Canada and New Zealand, respectively). You can read the full report here.
 

Maybe that makes you feel warm and tingly, but what does that have to do with unlimited power, and why are you still reading?

 

You see, the majority of charitable giving comes in the form of “restricted” giving, and at first glance, this makes sense. When Haiti needed help rebuilding its infrastructure, Non-Governmental Organizations (NGOs) raised money from the US, swooped in, and delivered funds in order to direct tasks like re-building roads, hospitals and things of that nature.
 

This form of charitable giving is one of the most common, and for a long time it made sense. There’s a strong chance that you’ve given to feed the starving in Africa or help Typhoon victims of Indonesia or the Philippians to get food and shelter. Assuming you’ve made donations like this (or similar to this), it’s unlikely you jumped on a plane with food and blankets in hand; chances are that you donated to a reputable organization you knew (maybe the Red Cross), which then filtered funds to smaller NGOs until the funds reached the intended beneficiaries.
 

Here’s the problem with that model: Some people think the current model of charitable giving might not work.

 

Years after unprecedented resources flowed into Haiti, progress is slow, and many are questioning whether NGOs are helping or hurting. This debate is not new, and has existed among many African states for years; slowly, several developing nations have delivered a not-so-subtle message: We know what we need best. If your money comes with strings attached, we don’t want it.
 

At least one organization agrees.
 

GiveWell operates under a simple premise: People operate out of their own interests, and they know how to help themselves best. To that end, they’ve developed a pretty radical giving model. GiveWell gives large cash grants directly to those in need with no strings attached.
 

This brings us to our opening question: What happens when you give someone unlimited power?

 

What happens when you give someone the cash equivalent of one month or even one year of his or her local wages? Most NGOs and charitable giving experts believed that poor, uneducated people in need from developing nations would squander the money—spending it on drugs, alcohol or frivolous purchases. So the founders of GirvWell decided that they would run an empirical test. They went to villages in Kenya and provided cash grants directly to remote villagers and then waited to see what would happen. NPR has a pretty good podcast outlining what was done here.
 

As referenced in the podcast, and as published in this MIT publication the overwhelming majority of grant recipients did pretty well with the money they received. In most cases, the funds were used to make structural investments that helped families to elevate themselves slightly out of poverty. When villagers were surveyed, the follow-up interviews lasted over six hours, and researchers found that the results were quite positive. Children in families who received these unrestricted cash grants went to bed hungry more than 40% less often. Typical investments included things like buying live stock or installing a roof on a mud hut.
 

This effort is remarkable for at least three reasons:

  1. The traditional model of charitable giving has existed for as long as anyone can remember, and has never been questioned or challenge.
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  3. GiveWell’s new model was openly critical of the traditional method, but from a scientific point of view; the organization never said it new best; it only questioned the status quo
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  5. GiveWell constructed a scientifically valid experiment in advance to test whether its model of charitable giving would deliver results, and how those results might compare to the traditional model

 

In my opinion, there are some valuable lessons to be learned here. If you’re reading this, chances are that you manage people; you might be a parent. In either case, on a daily basis, your job is to direct the efforts of others. In my own experiences, I’ve always tried to motivate others, set a shared expectation of what success looks like and then empower them to achieve that success on their own. This is as true of my childrens’ efforts to clean their room as it is of a colleague’s efforts to launch a new business initiative.
 

This is in contrast to a micro-management approach, and one I always thought was superior. I think that GiveWell’s empirical study of what happens when you do similar things to people far less fortunate demonstrates that the model works. Interesting food for thought.
 

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Are you lucky or good? Does it matter? (Yes, and here’s why)


Are you lucky or good? Does it matter? (Yes, and here’s why)

On the first day of business school, I had a statistics professor who asked us to do a little exercise. There were about 50 people in the class, and our professor handed each of us a quarter. He then asked us to all stand up and flip the quarter. Everyone with heads was to sit down, while everyone with tails was to remain standing.
 

After six coin tosses, there was a single person left standing, and he’d flipped heads six times in a row. At that point, the professor asked us: Is there something amazing about this man’s ability to flip coins, allowing him to flip heads six times in a row? Or do the laws of statistics and probability dictate that someone in this group of 50 must exist to fill the shoes he’s stepped into?
 

Put differently, the question came down to this: Was this guy lucky or good?

 

Clearly the laws of statistics and probability would demonstrate that this man was lucky…. But I think that within each of us there is a desire to use our skills to improve our luck and become the person who steps into those statistically required shoes of success.
 

All of this was inspired by a recent article on Tech Crunch entitled Welcome To The Unicorn Club: Learning From Billion-Dollar Startups. The article is an enjoyable read, backed with a bunch of interesting infographics that make this point: only 0.07% of all venture-backed startups made it to the $1BN mark.
 

That means that the odds of an entrepreneur breaking through with a $1BN idea are 1 in 1,400.

 

That said, not all entrepreneurs are created equal, and I thought there must be a few things that one can do to improve his or her odds. After all, whether we are running our own business or launching a new initiative, there’s more at play than just sheer luck. Going back to my grad school example, had that young man who flipped heads six times never applied himself, taken the GMATs and entered business school, he’d never come across the opportunity to flip heads six times, right?
 

That got me thinking about the qualities of those ultra rare and ultra successful individuals in the world. Forbes had an interesting piece on what it takes to be a billionaire.Entrepreneur magazine has a profile of what it takes as well, and I’m sure there are no shortage of such check lists and statistics. Much of it is not very helpful. Being a white male, for example, improves the odds of achieving financial success tremendously, but that insight wouldn’t help a minority woman. Being born in September seems to help as well, but for the 11 other non-Virgo Zodiacs, that doesn’t seem very helpful.
 

I’ve had the good fortune to work with some really smart and successful people. Based on what I’ve experienced and what I believe, here is my own list of what it takes to achieve success:

     

  • Think small, keep it simple and then go big: There’s no shortage of amazingly sophisticated ideas that go on to crash and burn because no one fully understands them. Remember Enron, anyone? The majority of companies and ventures that are successful for the long hall started out by very simply addressing an unmet market need.
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  • Be skeptical—of the opportunity and the status quo: Successful individuals are those who can spot opportunities; they see what others do not, and they believe in ideas long before they come to fruition. They are skeptical of the status quo. At the same time, successful individuals don’t blindly fall in love with their own ideas. They also think critically about their own concepts.
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  • Take risks, but never gamble: Risk and reward are related, and the bigger the risk, the bigger the reward. Otherwise why bother, but there is a huge difference between taking a risk and taking a gamble. The former entails a thorough evaluation of the variables that affect success with an eye towards controlling and mitigating risks. The latter is just a matter of blind luck.
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  • Evaluate all the data—even what you can’t directly measure: Related to the above, successful individuals are those who tend to be fact-driven, but who also know how to follow their guts. A fact-driven foundation typically provides a good starting point, but there’s something to be said about intuition, and successful folks are those who know how and when to follow it.
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  • Stick with it, give it time, but know when to walk away: All good things take time to get off the ground and bear success. At the same time, not every idea is going to be successful, and it takes a unique mixture of skill, experience, passion and discipline to know when to “hold’em” and when to “fold’em”. http://www.youtube.com/watch?v=kn481KcjvMo
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  • Be passionate and keep it real: Finally, and perhaps most importantly, successful folks are passionate about what they do, but not so much so that they drink their own Kool-Aid. I’ve had the good fortune to meet celebrities, CEOs, world activists and a fair number of people who appear on magazines and television. The first time I met such a person, I was struck by how humble and normal these folks were. As time went on, I came to learn that the typical profile of a successful person is that she or he is very passionate about his or her work, but very approachable and, for lack of a better term, normal.

 

All of the above are necessary but not sufficient in order to achieve success. There will always be an element of luck (or statistical probability for the quantitative types). Between skill and luck, here is only one variable that can be controlled. The framework above is just my take on how to go about improving the odds.
 

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How a 15-year old changed the world and how you can, too


How a 15-year old changed the world and how you can, too

Deep within each of us lies a desire to change the world. For most of us reading this, that means making the world a better place and improving the human condition. For the majority, this is achieved through every day, small scale successes like educating young children, helping strangers, creating jobs, mentoring and the like.

But one 15-year old changed the world by developing a cancer test that is 168 times faster and 26,667 less expensive and 400 times more sensitive than existing alternatives.

Those were not typos. A 15-year old came up with a test for pancreatic cancer that is a fraction of the cost and many times better than the existing alternative.

For those who don’t know, every year, about 45,000 people are diagnosed with pancreatic cancer in the US. The disease has an 85% morbidity rate.

These are US statistics, but doing a simple extrapolation, that would imply that over a million people develop pancreatic cancer each year, and the survival rates are probably lower in developing countries, which is where the majority of the world’s population resides.

Existing tests, developed by leading pharmaceutical companies, cost thousands of dollars. This new test—developed by a teenager—costs roughly three cents.

The inventor of this new technology is Jack Andraka, who won a $75,000 prize at the Intel ISEF 2012 Gordon E Moor Award. The young inventor, now 16, has retained a patent lawyer and is very likely to earn a lot more than that once his invention gets to market.

For such a young person to make such an amazing break through, Mr. Andraka is remarkably well rounded, as can be seen from his recent appearance on the Colber Report.

Jack may be young, but there are a few key lessons to be learned from his success.

Do what you believe: Jack had an epiphany and believed it was possible to use a low-cost paper sensor with an electrical voltage test to redefine how pancreatic cancer was tested;

  1. Make sure you have a great support network: Jack believed he could pursue his insights because he came from a science-friendly family; his father is a civil engineer, and his mother would spend countless hours waiting in the family car over the 7-month period it took for Mr. Andraka to perfect his technology;
  2. Don’t take no for an answer: Jack wrote to 200 research labs and was rejected by 199 of them. The single positive response he got was from Johns Hopkins which allowed him to make use of their facilities for his research and design;
  3. Stick with it: Forget the fact that it took this young inventor 7 months to perfect his technology; many believe it will take a decade for his invention to reach commercialization. That feels like a long time to me, and it has to feel even longer for Jack. Still, from his recent remarks, he seems as enthusiastic and bullish as ever.

I don’t know that I’ll ever be fortunate (or smart) enough to develop something that can save so many lives, but I know that I will be looking to this young man as a source of inspiration the next time I think something is too hard.

I hope you do, too. If Jack can change the world, maybe we all can.

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Big data? Big deal.


Big data? Big deal.

Over the past year or two, there’s been no shortage of chatter about Big Data.

In a sign of the times, Big Data has its own write up on Wikipedia, and McKinsey continues to extol the benefits of innovation, competition and productivity of Big Data.

But I have to wonder whether Big Data this is more hype than substance.

Don’t get me wrong; data analysis, insights and analytics are tremendously valuable. Data is what has allowed us to decode the human genome, identify the root cause of SARS and wipe out or dramatically reduce diseases such as Measles and Rubella.

But those are all accomplishments of the past. To be sure, there will continue to be similar accomplishments in the future, but doesn’t that mean that we’ve been benefiting from the virtues of Big Data for many years now?

More and more, I am coming to believe that Big Data is just the latest buzz term used by armies of consultants to sell more X. (Hardware, software, services, etc…) Granted, I’ve spoken a lot about Big Data on my own blog, but I’d argue that the points I’ve raised (and continue to raise) are fundamentally different, and best summarized by a close friend of mine, who is the CEO of a middle market financial services firm:

Big Data is not tech. It’s a cultural shift that affects my people, operations and culture. It’s a disruptive innovation and a new way of thinking about things that can make my company better, stronger, smarter and more competitive. If we can figure out how to be more data-centric, we can get better products to more customers and make more money.

I think that sums it up pretty nicely. There’s a ton of money being spent on Big Data initiatives right now, and if you read any of the white papers in this space, they all seem to advocate the same thing. Set up a Hadoop cluster, identify, tag and cleanse data and do some visualizations. That’s a great way to dip a toe in the water and begin setting up experiments, but the big fuss about Big Data started two years ago, and no one seems to have provided any insights into what to do after these interesting experiments get set up.

I don’t have a crystal ball, and I don’t pretend to hold myself out as an expert, but I am convinced of a few things:

  1. Big Data is just a buzz term to describe the continuing evolution of human beings to better use information to solve big problems;
  2. The effort described above can be hugely valuable, even if the term itself is vague, and;
  3. Most Big Data efforts are really people issues that are mistaken as technology issues.

This last point is key and reflected in the quote from my friend above. It took Corporate America years to understand that IT was not an expense item to be minimized, but a strategic enabler to business operations and strategy.

Despite this realization, IT still struggles to be understood by many managers, and this might be why the US continues to suffer from an IT productivity paradox.

Given the continued investment firms are making into Big Data , I don’t think firms can continue to mistake the human element of driving technological change.

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Are you a lateral thinker?


Are you a lateral thinker?

Linear thinking is the hallmark of any good problem solver. The ability to decompose an issue, examine each part and then put everything back together in more efficient manner is core not only to a successful business, but a successful life.

At the same time, there are situations when a different approach is warranted; this might be referred to as break-through or out of the box thinking. I refer to this as lateral thinking, and it’s the ability to look across multiple linear functions to identify patterns.
I think that the best example of lateral thinking comes from a BBC television series called Connections.

In it, James Burke would describe how landing a man on the moon was the result of a love affair from the 1600s when Newton sought to impress a woman and made up his story of falling apples. Connecting the desire to impress a woman with the ability to put a man on the moon is far from intuitive, but in 30 minutes, Burke would help us realize how inextricable these two events were.

In recent years, Malcolm Gladwell  is another great example of a thinker who is able to identify concrete relationships between otherwise seemingly unconnected issues.

I’m not privy to the personal lives of Burke or Gladwell; from my own perspective, I think growing up exposed to different languages and cultures helped prime my brain to thinking sideways (laterally) more often than not.

I’m don’t where this sort of thinking comes from or even whether it can be taught, but here are my thoughts on how to think across an issue rather than hitting it head on:

  1. Don’t look at the problem, but at the source of the problem and ask, “Am I treating the symptom or the disease?” All too often, a performance issue can find root in a communication failure.
  2. Understand the big picture and context in which you’re operating. If sales are declining (for example), try to understand which variables are within your control and which are market-driven. Also, be sure to avoid shooting the messenger. Maybe your sales team needs to be revamped, but maybe you’ve got a great team and a poor product mix.
  3. Take a functional view of what you’re trying to accomplish. No process or business unit operates in a vacuum. As clichéd as it sounds, a chain is only as strong as its weakest link. Functional units exist because they rely on and support one another. Many business improvement efforts fail because efforts are taken in isolation, rather than holistically.

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