When we understand this slide...

THE MAN, THE MESSAGE, THE MEDIUM Earlier this week, I attended a presentation by a very senior manager in my company; the man by himself was inspiring, what he had to say was interesting and his body language was down-to-earth and honest... but his Power-point slides were a different matter altogether. Somebody had created a complex structure which weaved back & forth, interspersed with slides carrying 13 double-lined sentences or bullets with sub-bullets which had further nested text – whoa, what was happening here?!

Sure enough, as we progressed through the slides, (IMHO), the presenter found it increasingly difficult to explain each and every one of those points. In many cases, he skipped over some points, while in others he laboured his way through each and every one, trying very hard to fit all of them into the context of what he was explaining. It would be easy blame this on the creator of this specific deck or on the complexities of the business we operate in or maybe even label it as a cultural artefact of a tech-co… but I believe that something else ails us all – the medium of Powerpoint.

“When we understand that slide, we’ll have won the war”
Last week Elisabeth Bumiller wrote a great article in The NYT about the pervasive infiltration of Powerpoint in the US Army; when Gen Stanley A. McChrystal was shown the image above on a slide, he exclaimed “When we understand that slide, we’ll have won the war”. Bumiller quotes a legendary essay “Dumb Dumb Bullets” by Col. TX Hammes in The Armed Forces Journal which explains the logic of how MS PPT is a particularly bad decision-making aid. Ye gods, you say?

Well, here’s the gist of what he says:

• The predecessor of Powerpoint, the lowly common memo, required people to summarize complex issues into coherent arguments; but bullets aren’t sentences and they allow one to dump information on slide without bothering with prior analysis or constructing an argument.


• If and when a complex argument is unavoidable, the creator of the PPT dumps paragraphs of text on a slide – this forces the audience to read the slide while the presenter is talking about it – neither act is done effectively.


• Most powerpoint decks are created with an approximate time limited of 1 minute/ slide; consider the average slide with nifty animation, flow of events, waterfall diagrams and ‘a-ha’ boxes; how much time does the audience have to absorb this overload, leave alone synthesize the underlying implications and respond accordingly? If you had, 20 pieces of information per slide, that makes it 3 seconds per piece. Now you understand Col.Hammes barely suppressed urge to hammer the genius who came up with quad charts (divide a slide into 4 quadrants and fill them with info, voila!)


• The author agrees that Powerpoint has it’s uses as an information brief; it’s an excellent training aid and presents a rich variety of text, audio and video options. However if the objective is to stimulate thinking, impart a deep understanding of a subject or lay out the complex content for making an important decision, the ordinary text-filled 1 or 2 page memo may still be the best bet.

MY PERSONAL TAKE My take on this stems from personal experience at the University of Chicago; I worked with two outstanding professors, with Sanjay Dhar as a Teaching Assistant and with Mathew Bothner as a student. These professors insisted that for every assignment, all they wanted was a 1 page submission. This not only forced us to put content over gimmicky templates/animation but also helped us cut out the chaff and prioritize the most important arguments that would lead to a convincing conclusion. Some of these cases required sophisticated financial calculations, information from interviews with stakeholders and consideration of complex regulatory issues… but at the end of it, the final decision would be summarized in the famous 1 page memo.

What do you think? How have your experiences with Powerpoint been? I would be particularly interested in hearing from people who were used to memos and now handle PPT. Let me know.

What some Chinese wanted to ask Obama...

I came across this article: “Potus Blossoms” in Harpers Magazine, Feb’10. The article presents a selection from 3,290 questions submitted by readers to China’s state-run news agency for President Obama’s town hall visit in Shanghai. Here are some of them:

• Tell me, how do you like Eastern Beauties?
• The U.S. Embassy in China is about to change your Chinese name from Ao-ba-ma to Ou-ba-ma. Do you think this is necessary? The Chinese media and people have always called you Aobama. Now 1.3 billion Chinese have to change how they say it. It’s a real pain.
• How come the United States can “secure” the whole world for the sake of “national security,” while China can only protect its own borders?
• Have you ever thought about riding a rocket into outer space?
• Can I discuss with you China’s purchasing Hawaii with U.S. dollars?
• You already have two daughters. Will you try for a third child? What will you think if the next one is yet another girl?
• If you had to choose three flowers to describe your wife and daughters, what would they be?
• What room are you staying in tonight?

Because Harper’s is behind a pay wall, you need to subscribe to see the full article, but I would strongly recommend a subscription. The magazine is surprisingly versatile in its depth and variety of coverage as also the water cutting-stone irony.

To get a free preview, you can check it out on Twitter here.

PS: Picture from http://www.cristyli.com/

Randy Kroszner On The Financial Crisis

I attended a lecture yesterday at the Chicago Booth London campus by Randall Kroszner, former member of the Board of Governors of the Fed Reserve. Randy is the Norman R. Bobins Professor of Economics at Chicago Booth and he spoke about his experiences during the financial crisis and his analysis of the causes and remedies. His talk will be up as a podcast/vidcast soon and I will share the link when it is up, but I found some of the Q&A (details below) especially fascinating:

Q. A Chicago alum now working with the FSA brought up the topic of issue of executive compensation in the financial services industry.

A. Kroszner's take was that the renewed attention to the issue is welcome but it might be a bit misfocused.

• To build his case, first he quoted the example of Bear Sterns - even though most BS employees had their compensation in the form of stock, this did not prevent excessive risk -taking; at the end, they lost 99% of the value of their shares. So just moving a component of compensation to stock (long term) instead of cash (short term) may be too simplistic and not necessarily avert insensible risk-taking.

• Secondly, he made the point that if you create a rule stating that "banks" cannot offer such compensation, it becomes a boundary issue - instead of a "bank", there will be some other body which will take up the risk for a suitable reward and so the boundaries (of which institutions take the risk) get redrawn but the systemic risk remains the same.

• And finally, Randy said that it is in the interest of the state and the public to see these quasi-state owned banks (RBS/ Citi etc) perform well and make a profit to the stakeholders (ie the taxpaying public). When you impose an artificial limit on the compensation of employees in such firms, it's shooting yourself in the foot... you will not be able to hire the best talent in the industry because the best talent will be picked up by privately owned competitors who can pay them more... (My personal take: unless you have altruistically motivated geniuses who are willing to pass on the cars and the yachts and work to save these banks while taking flak from the government and the public - does anyone see that happening?)

Randy's conclusion was that while there is definitely a problem in the risk-reward alignment and while it is a popular perception that bankers are overpaid, the issue is a lot more nuanced and interconnected with systemic issues it appears to be.

Q. Can the West spend its way out of the recession?

A. "If something cannot go on forever, it will stop" - Herbert Stein. Randy made the case for a difference between spending that becomes a multiplier and spending that's pointless. If the stimulus spending was to improve the state of infrastructure or to repair the high school education system in the US, then it makes sense to invest because the returns will be manifold. On the other hand, if stimulus investments are spent on "porkers", then you're probably digging yourself deeper into a hole... acc. to Randy, the %age of the current stimulus package being spent on what he called "useful long term investments" was not at all encouraging.

Q. How did you feel in the heat of the crises - how did you make decisions etc? Were you scared? (not my question!)

A. Yes, he said, there was a heightened awareness of the immense impact of each decision but rather than fear he said that this created a very acute focus on the issue at hand. He quoted a favorite book of mine, The Lords of Finance and how it opens with Montagu Norman, the then Governor of the Bank of England going on a long holiday because he was stressed out... almost in the middle of the Depression. Would Bernanke be able to do this today? ;-) He stated two issues that he thinks made the difference:

1. In the middle of a crisis when there are a hundred things flying all over the place, it is very important that you have an analytical framework in place... this framework helps you set aside emotional baggage and associated panic and points you in the right direction. It sets the context for what one needs to focus on and keeps you focused on that, or at least in his case
2. It helped tremendously that 3 of the 9(?) Fed governors had done academic research on the causes and effects of previous Depressions/ Recessions. For example, they knew that in the panic of 1907, JP Morgan had the choice of either bailing out the Knickerbocker Trust or letting it fail as punishment for screwing up. When Morgan let it fail, it signalled the end of the private clearing house system and ushered in the Fed Reserve system. It was an analytically easy decision to let Bear Sterns fail for its transgressions... but as they knew from history, this could have become the first step in letting the Fed Reserve System fail and no one wanted that to happen.

These points were fascinating - for me, they illuminated the importance of having an analytical framework or viewpoint when going into a crisis. At the same time, it also highlighted the importance of learning the right lessons from history and not missing the link between cause and effect.

Thoroughly fascinating descriptions but I was a bit disappointed that there were no specific prescriptive stances that Randy took... especially with regard to executive compensation or bank regulation. Yes, the issues are very complex and sophisticated but it would have been great to hear him a stake on the ground with rules or assumptions that could form the basis of any future decisions.

UPDATE (23.Feb.2010): Penka Bergmann from the London campus just mailed and shared the podcast link - happy listening!

Why won't America be realistic?

I attended an interesting LSE Ideas discussion/book launch about how America refuses to be realistic. It was chaired by Prof.Michale Cox of the LSE whose student was the author: Dr. Adam Quinn, a lecturer of International Politics at U of Birmingham.

Naive in politicalese, I saw the title "Why won’t America be realistic" and thought oh, here we go, one more round of US-bashing by Les Europiennes... I was quite wrong and in fact enjoyed the entire chat.

Suspecting that there were some of us who didn't know anything about political philosophy and the like, Dr.Quinn started by defining Realism: states competing against each other for scarce resources and acting to further their national interests. This effectively means that countries act with a worldview that considers the world as it is as opposed to how an ideal world should be. Advocates of this school included Kissinger and Morgenthau. He went on to state that the venerable #42 aka W. was obviously not realist but Quinn says that it wasn’t just about him... the country itself has been constrained right from its founding days by a strong ideology that pushes it away from realism.

When it all started, America was a weak confederation of states, unable to project power and too weak to dabble in European affairs - so it tended to itself, with its civil wars and expansion into the wild wild West and the civil wars. – its geographic isolation bolstered this political school of thought.

In the 20th century, one would have expected this stance to change - but even though its economic and moral interests drove American engagement with the world, Quinn says that the domestic political culture did not change. After WW1 and WW2, as European boundaries were redrawn, America decided not to join the old world order but rather tried to create one of its own. With Wilson came the position that there was a distinction between the government of a country and the people; the Cold War was essentially about Wilsonian aims and Rooseveltian force. Such an ideological basis dictates that America intervenes in Zimbabwae or Rwanda even if realism would suggest that it shouldn't.

So far, so good... but when Quinn sat down, Dr.Tim Lynch argued that this was a very subjective view - for example, Haiti or Iraq would probably have been better places if America had intervened more often. He quoted the example of Bosnia to suggest that American intervention meant more order and more stability. A very interesting example he gave was the NHS, which was set up with American funding - what do you know! ;-)

Lynch also took issue with Quinn's assertion about America not being realist during the Civil wars - he believes that the diplomatic efforts of McPherson & Lincoln were far more realist than anybody knew then. And his principal counter-argument example was that of the Cold War - by persisting with its ideology and not with realism, America won it. In a world where China is tightening its grip on African commodities and the Russians are laying siege to Arctic oil, he argued that it might be better for America to shed its ideological cloak and embrace realism fully.

A bunch of very interesting points to which Quinn obviously didn’t agree - you can check out the podcast here and the book is available for a whopping £71 at Amazon.

My superstar question for Quinn was about how America could be so decidedly realistic in asserting its economic power - was that something he had considered? But somebody else beat me to it and his answer was that his thesis did not consider the realm of economic policy - rightly so, because thats an entire theory in itself but how in the context of the question, how separate is foreign policy and economic policy, really?

With red wine, crackers and some interesting flashes of argument, deciding to attend these LSE Ideas sessions is turning out to be a good idea.