## management - Matt Levine

### Parallaxes

Last year I blurbed Gary Sernovitz's novel, [_The Counting House_](https://www.uno.edu/unopress/the-counting-house), whose main character is the chief investment officer of a fictional university endowment. (I really liked it - it is not for everyone, but I think it is probably for a lot of Money Stuff readers.) Much of the book consists of somewhat comical pitch meetings, in which managers of hedge funds and private equity funds and lending businesses try to convince the CIO to invest some of the endowment's money with them. The CIO is jaded: He has heard all this stuff before. There are only so many ideas, and he keeps hearing versions of them. He knows the weak points of each of them, knows before he asks the questions what the answers will be. The book is among other things a survey of the popular ideas in alternative investments in 2023, how they are pitched and what their flaws are.

Here's [a Wall Street Journal story](https://www.wsj.com/finance/investing/tax-whiz-strange-hustle-wall-street-d51ddbc6) about Andy Lee, who runs Parallaxes Capital, an investment firm that buys tax receivables agreements. His limited partners say stuff like this:

> As Lee pitches TRA holders, he educates potential investors. "I got the deck sent to me and at first I didn't really understand what this was," said Gilbert Calderon, chief investment officer at M4 Capital Management, a single-family office in Chicago known for buying esoteric investments. M4 eventually signed on.

That's what you want! "I got the deck sent to me and at first I didn't really understand what this was," conditional on eventually understanding it, is ideal. I mean in the sense that you might be getting an uncorrelated source of returns, but also in the sense that you will have a little treat, some entertainment in your workday, a pitch meeting that, for once, will feel new. "We do private equity rollups of middle-market companies," six people pitch you every day, but you only get so many TRA guys. Possibly only one TRA guy.

Meanwhile the other side of the trade - the people with tax receivables agreements that Parallaxes wants to buy from them - are similarly attractively confused:

> Lee often starts with cold outreaches to people with TRAs who are surprised to hear from him. One company founder responded to Lee's pitch with a cry laughing emoji. "I don't know what a TRA is, so probably not for me," the founder said.
> 
> Lee had the public financial filings to prove the founder had a TRA and a price Parallaxes would pay for its future cash flows. Through thousands of conversations and one-on-one deals like these, Parallaxes has invested more than $300 million across four funds. It is currently raising two more.

Again, that's what you want! If you are in the business of buying _____s from people who don't know that they have _____s, or what a _____ is, they are probably not going to drive a hard bargain, no matter what goes in that blank. "I'll give you $1 million for your TRA." "I do not have a TRA and have never heard of such a thing." "Then this $1 million is found money isn't it?" "Sure where do I sign." 

As it happens, we have [talked about TRAs](https://www.bloomberg.com/opinion/articles/2023-08-30/sculptor-is-full-of-conflicts) before, when Sculptor Capital Management Inc. was in a hostile takeover fight involving, among other things, its TRA. Basically if you are a founder or early employee of a private partnership, and then later it goes public, you will end up converting your partnership shares into shares in a public corporation, which will trigger immediate taxes for you and tax savings for the company over, often, 15 years. The norm is for the company to pay you most of those tax benefits (typically 85%) as they are realized; realizing them means mostly the company having enough taxable income to take advantage of the tax savings. So a TRA is a quasi-debt instrument of a public company, one that doesn't trade and that has unusual triggers. So if you sell this weird illiquid bond-ish thing to Parallaxes, you should expect to sell it at a big discount, and Parallaxes makes its money by figuring out which TRAs will pay out and buying them at a discount.

As is often the case with weird corporate derivatives trades, though, this is _really_ a bet on merger activity. The Journal reports:

> Parallaxes's first two funds have returned about 15% annually, according to investors. Later funds have done better because some companies whose TRA rights they owned were acquired and the TRAs were paid out early.

TRAs often have acceleration provisions that say that if the company gets acquired then the TRA gets paid out all at once, at maximally favorable assumptions, rather than over 15 years and only if there's taxable income. So if you buy a 15-year TRA at a 15% yield and all it gets paid out next year, that's where you make the real money.

TL;DR IT IS WISE TO ONLY INVEST IN WHAT YOU UNDERSTAND!

### Everything is securities fraud: OpenAI

I sometimes write "everything is securities fraud" as a shorthand for a [particular weird argument](https://www.bloomberg.com/opinion/articles/2021-02-03/goldman-sachs-goes-to-supreme-court-hedge-funds-won-on-gamestop-kkpoe6ws) about how modern US legal dynamics transmute every bad action taken by a public company into securities fraud, but never mind that. A simpler story is that if the board of directors of a company (public or private) puts out a public statement saying "turns out our chief executive officer is a big liar," _somebody_ is going to think that's securities fraud. Whatever the CEO was lying about was _probably_ material to the company - otherwise why would the board care? - and you've got to at least look into it.

This isn't quite that, but [the Wall Street Journal reports](https://www.wsj.com/tech/sec-investigating-whether-openai-investors-were-misled-9d90b411):

> The Securities and Exchange Commission is scrutinizing internal communications by OpenAI Chief Executive Sam Altman as part of an investigation into whether the company's investors were misled.
> 
> The regulator, whose probe hasn't previously been reported, has been seeking internal records from current and former OpenAI officials and directors, and sent a subpoena to OpenAI in December, according to people familiar with the matter. That followed the OpenAI board's decision in November to fire Altman as CEO and oust him from the board. At the time, directors said Altman hadn't been "consistently candid in his communications," but didn't elaborate. …
> 
> Some of the people familiar with the investigation described it as a predictable response to the former OpenAI board's claim in its November statement. One of the people said that the SEC hasn't pointed to any specific statement or communication by Altman that it has deemed misleading.

Right, maybe they'll find a "specific statement or communication" _to investors_ that was misleading, and he'll get in trouble; probably they won't. But if the board of directors of a giant company fires the CEO for the stated reason that he was _not candid_, the SEC really does have to look into it.

"A giant company," I said; not necessarily a _public_ one. "The SEC enforces laws that forbid people from misleading investors, regardless of whether fundraisers seek capital in public or private markets," notes the Journal, correctly. Still there are some relevant differences between OpenAI and most companies:

1. OpenAI's stock does not continuously trade in public markets, so its CEO could go around lying about lots of stuff without _tricking investors into buying stock_. If you are the CEO of a public company and you go on television and say "we have built a superintelligent robot that can cure cancer," people will buy your stock, the stock will go up, and if it turns out you were lying, they will sue you for fraud. If you are the CEO of a private company and you do that, nobody will trade the stock, because they can't. If you then try to raise money by selling stock to investors two weeks later, and you send them a private placement memo saying "we have not built a superintelligent robot, we're not even working on cancer, our CEO was just letting off steam on TV," and then they buy the stock, they weren't misled, were they? This is very much not legal advice, don't do it, but the point is that _every public statement_ by a public-company CEO is risky, while private companies have more limited investment-related communications.
2. In a typical _private_ company, and particularly in a typical _tech startup_, if the CEO is lying to the board of directors, he is also lying to his investors, because ordinarily the board will include several representatives of the venture capital firms that invest in the business. So if the board feels misled, the investors probably feel misled, because they're the same people. That's not the case here. In fact, it is exactly the opposite here: OpenAI's [description of its corporate structure](https://openai.com/our-structure) says "the board remains majority independent," and "independent directors do not hold equity in OpenAI." (Microsoft Corp., OpenAI's biggest investor, is represented by [an observer on the board](https://www.bloomberg.com/news/articles/2024-01-05/microsoft-picks-dee-templeton-as-openai-board-observer), but has no voting rights, and even the observer seat came after Altman's firing and unfiring.) So in some sense the board of directors was a good group for Altman to mislead: They weren't investors!
3. I continue to find it funny and relevant that, at the top of [OpenAI's operating agreement](https://openai.com/our-structure), it warns investors: "It would be wise to view any investment in OpenAI Global, LLC in the spirit of a donation, with the understanding that it may be difficult to know what role money will play in a post-[artificial general intelligence] world." I still don't know what Altman was supposedly not candid about, but whatever it was, how material can it possibly have been _to investors_, given what they signed up for? "Ooh he said it cost $50 million to train this model but it was really $53 million" or whatever, come on, the investors were donating money, they're not sweating the details.

### Everything is securities fraud: JBS

On the other hand, the general idea of "everything is securities fraud" is that if investors care about a thing, and the company says misleading stuff about the thing, then that's securities fraud. _Traditionally_, investors cared about things like profits, and companies sometimes cooked their books to show misleading profit numbers, and that was traditional securities fraud. But the modern theory understands that investors care about lots of things that could impact the company's business - its policies for [securing customer data](https://www.bloomberg.com/opinion/articles/2023-10-31/bad-passwords-are-securities-fraud), its [treatment of its employees](https://www.bloomberg.com/opinion/articles/2019-02-13/santander-didn-t-pay-its-non-debt), its [treatment of its whales](https://www.bloomberg.com/opinion/articles/2018-09-21/seaworld-s-strange-securities-fraud) - and misleading investors about any of those things could be fraud.

In the modern world of environmental, social and governance (ESG) investing, it seems pretty uncontroversial to say that at least _some_ investors care about a company's environmental record. And thus lying about your environmental record gives investors - or regulators - a securities-fraud hook to sue you.

You could imagine some sort of world in which governments directly regulated companies' environmental behavior, in which people made collective judgments about climate trade-offs through a democratic process, governments made rules enacting those judgments, companies followed those rules, and people got the level of emissions that they wanted. It's one approach.

But I think that the US approach is, roughly, that people make rough collective judgments about climate trade-offs _through their ownership of ESG investment vehicles_, investment managers pressure companies to enact those judgments, companies respond to those pressures by making environmental promises, and US regulators [regulate those promises](https://www.bloomberg.com/opinion/articles/2022-03-22/the-sec-will-regulate-climate) and punish the companies when they are false. Environmental regulation through securities fraud. It does seem second-best? [Bloomberg News reports](https://www.bloomberg.com/news/articles/2024-02-28/ny-sues-world-s-top-meat-packer-jbs-over-climate-impact):

> New York state is suing JBS SA over allegations the world's biggest meat-packer misled "the public about its environmental impact."
> 
> New York Attorney General Letitia James said the meat producer has failed to provide a viable plan to meet a widely-advertised commitment to reach net zero emissions by 2040 and that it could not feasibly meet such a goal, according to a filing. The company "has made several misleading claims about its environmental impact, including pledges to curb deforestation and reduce its greenhouse gas emissions," a statement from the attorney general's office said.
> 
> Several companies across different industries have made net zero commitments over the past few years amid growing pressure from investors, regulators and environmental groups. Still, many of them are yet to provide a clear pathway for decarbonization. Climate-washing claims against business have also become more usual, with most cases being originated in the US.

Right. I will say it is kind of strange to sue a company specifically for lying about whether it will have net zero emissions by 2040. It's only 2024! How can you prove that?

## management of the absurd - richard farson

If you were asked to predict the group in our society that is most likely to mount a liberation effort to end its oppression, would you have a greater chance of success picking the group for which you feel the most sorry, or the one for which you feel the least sorry? (Least sorry is correct.) Liberation movements usually arise from groups thought at the time to be perfectly content.

From where is the leadership of those liberation movements most likely to come? From those most oppressed by the conditions, or those least oppressed? (Least.) The leaders come from outside or from the margins of these groups. Seldom from the most oppressed segments.

The opposite of a profound truth is also true.

Granting authority is not like handing out a piece of pie, wherein you lose what you give away. It is more like what happens when you give information to someone. Although he or she may now know more, you do not know any less.

One exec I know is a classic example of a man who wants to succeed but at the same time seems to want to fail. Everything he does carries both messages. From the very moment he enthusiastically volunteers to head a project, he operates in such a way as to cripple it - refusing to delegate, undermining the work of committees, failing to meet deadlines, and stalling on crucial decisions.

Predictions rely heavily on knowledge of present conditions, but present conditions are largely invisible.

What parents do makes little difference. What they are really matters. Most children adopt the characteristics that define their parents, whether their parents want them to or not.

Any technique loses its power when it becomes evident that it is a technique.

Meet each situation armed not with a battery of techniques but with openness. Transcend technique.

Ultimately, people discover who we are and come to regard us as we regard them. If we genuinely respect our colleagues and employees, those feelings will be communicated without the need for artifice or technique. And they will be reciprocated.

Effective leaders and managers do not regard control as the main concern. Instead, they approach situations sometimes as learners, sometimes as teachers, sometimes as both. They turn confusion into understanding. They see a bigger picture. They trust the wisdom of the group. Their strength is not in control alone, but in other qualities: passion, tenacity, patience, courage, firmness, enthusiasm, wonder.

Our most important human affairs - marriage, parenting, education, leadership - do best when there's an occasional loss of control and an increase in personal vulnerability - times when we do not know what to do.

Think of the difference between seduction and romance. Technique is required for the former, but is useless in the latter. If you know how to have a romance, it isn't a romance, but a seduction. Not knowing how to do it makes it a romance.

Most arguments and conflicts are unconsciously designed to get us to reveal that the other has had an impact on us.

When we begin to understand how something works, we think immediately that we will be able to make it work. That may be true in the physical world, but it is far from true in the world of human relations.

Technology creates the opposite of its intended purpose. Has the introduction of A/V technology into schools led to better-educated students? Has computer-aided design improved architecture.

Face-to-face communication often introduces more "noise" in the system and imposes more limitations on personal expression. The very technology that threatens to depersonalize our society offers a way to connect people, to restore a sense of community in our lives, to deepen our relationships.

When participants could talk not only to the persons next to them but to all other members of the group, then the problem-solving ability of the group diminished markedly, and it became virtually paralyzed.

Many supposed communication problems are actually balance-of-power problems. That's why it's probably unwise to introduce completely open communication into a situation where there is a large disparity in power.

The metamessage is more powerful than the message itself.

It can be tiring for managers to focus entirely on what the other person means and how he or she sees the world. Ordinarily, humans need more psychological space in which to move in their communication. Listening denies the listener that space.

The best kind of listening comes not from technique but from being genuinely interested in what really matters to the other person.

There is something graceless and manipulative in analyzing those special moments when we are enriched and exhilarated by someone's listening to us, or being honest with us, or praising us, and teaching them as human relations or management skills. It's like learning memory tricks so you can call someone you barely know by name.

Giving praise establishes the fact that you are in a position to sit in judgement.

When the work of a high-status person is praised by a low-status person, it is often seen as presumptuous or even insulting. As if an ordinary person told Picasso, "You're a very good painter." Compare with a way that respects the status difference, "I love your painting."

What really does release creativity and promote achivement is when a manager takes the time to get involved in the employee's work - learning what direction the work is taking, the problems and possibilities it presents, the way the employee is dealing with the task. But involvement is demanding and time-consuming, which explains why many managers resort to praise as the substitute, hoping it will accomplish the same result.

Giving praise is easy to do. It makes for effortless conversation and demands far less imagination than do witty retorts, penetrating criticism, or brilliant insights.

We have civil rights - not only to protect us from bad people, but to protect us from good people as well, from people who think they know what's good for us. Tyrants have always acted in the best interest of their people, or so they thought.

Ex-convicts are better able to rehabilitate prison inmates than is the prison staff. Ex-addicts are more successful in getting other addicts off drugs than are psychiatrists. Students learn more from each other than they do from their professors. People tend to be much smarter about their own situations than we give them credit for. A full grasp of any problem is only in the hands of the people who have experienced it.

Alcoholics Anonymous, Weight Watchers, Parents Without Partners, Gamblers Anonymous: each of them demonstrates the power of people who are themselves beset with problems, and yet are able to help each other in ways that the professionals have not yet learned to do.

Participative management - involving the people who have to do the work in the decisions that will affect them - is based upon the idea that people are better than we think they are and can be counted on to make wise choices. A considerable amount of research shows that people learn faster, produce more, and are more highly motivated when participative methods are employed.

It can take an inordinate amount of time and patience to develop a group than can practice participative management.

The healthier you are psychologically, or the less you need to change, the more you can change. Psychotherapists have much more to offer such people.

What gets organizations into trouble are faulty leadership styles, poor internal relationships, and managerial blind spots.

Typically, people want someone else to change, and often for good reason. But for the consultant, the general rule is that the person who can change is the one to work with, and usually that is the person who has brought the situation to the consultant in the first place.

Individuals are almost indestructable, but organizations are very fragile.

Even the most intense, confrontational, and sometimes traumatic situations rarely damage an indivudual. Yes there is hurt, but seldom is there permanent damage. People survive the most devastating natural disasters in relatively good psychological shape. But relationships can be destroyed with one wrong word, one single act.

People suffer most in their lives from failed or failing relationships - parental rejections, marital strife, difficulties with bosses - or from the lack of relationships - isolation, alienation, erosion of community. The best way to deal with individuals may be to improve relationships.

The better things are, the worse they feel: THE THEORY OF RISING EXPECTATIONS

Revolutions start not when conditions are at their worst, but only after they have begun to improve, reforms have been instituted, leadership has developed, and the populace has come to have a new vision of what might be.

Rising expectations fuel the fire of revolution and change because it creates a discrepancy between what people have and what they now see is possible to have.

Psychotherapy works the same way. Successful therapy leads not to satisfaction but to new and different feelings of discontent. As people solve lower-order problems that brought them to therapy, instead of becoming contented they become discontented about higher-order issues.

The motivation for continuing change and growth comes from the development of higher-quality discontent, then moving on to the solution of more important problems.

Maslow called them "grumbles": Low-order grumbles are deficiency needs: "It's too hot in here." High-order grumbles are "We need better safety standards." In a very healthy organization there are "metagrumbles": complaints having to do with needs for self-actualization. "I don't feel that my talents are being fully utilized."

For managers: Improvement does not bring contentment, but its opposite. The way to judge your effectiveness is to assess the quality of discontent you engender.

The paradox of rising expectations: in countries making their way toward democratic change there are the most troublesome demands from the population. In China the Tiananmen Square protests erupted after the country's leaders had done more to open China to the world than perhaps any other rulers in the nation's history. They had doubled the wealth of China in a decade, and instututed all manner of quasi-democratic and capitalistic reforms. When they got angry, protesting, thankless students in return,they resorted to the massive repression for which their backgrounds had well-prepared them.

The paradox of rising expectations: good marriages that reflect what most people would want in a marriage are more likely to fail than bad ones.

We want for ourselves not what we are missing, but more of what we already have.

Our absorbtion with what we do well may blind us to what will enable us to do even better.

Godfather to the idea of Management of the Absurd: C. Northcote Parkinson: author of Parkinson's Law: "Work expands to fill the time available."

It may take hours to discuss hundred-dollar items, while million-dollar items fly by. Almost everybody knows something sensible to say about a small item on the budget, but few can offer wise comments about a million-dollar item.

We need to fail often. If we don't, it means we're not testing our limits. It means we're not taking the necessary risks to improve our behavior.

Learning from success happens when you are on your game, things are working out for you, anything seems possible - and you are stimulated by your achievements. When are are doing a series of things right, it gives us the strength and encouragement to continue - which leads to our greatest successes. On the other hand, a series of failures can demoralize us.

Little is more encouraging than learning about another's failure, especially if it is an expert who is failing. Humans relate better to people in their failures than in their successes.

"Whatever a friend succeeds, a little something in me dies." - Gore Vidal

Responding to failure seems to bring out something good in us. We know better how to empathize with the person who is suffering than we do with a person who is succeeding.

Gossip is the single most community-building and social-bonding experience we have. Sharing stories of others' troubles is what brings us together.

Most of our succcesses and failures are due to forces not within our control. Other societies, such as Japan, recognize this better than we do.

Organizations are simply not good at changing themselves. They change more often as a result of invasion from the outside or rebellion from the inside. Less so as a result of planning.

The situations we try hardest to avoid in our organization would actually be the most beneficial for them.

People are pretty good the way they are. (News bias makes us think otherwise.)

Better managers try to fix situations, not people, by making structural changes in their organizations. Rather than attempting to change individuals, they are much more likely to change reporting relationships, enlarge or reduce the expectations of the job, etc.

Most employees are trying to do the best they can. They prefer to do good work, to cooperate, to meet objectives. They prefer harmony over conflict, action over inaction, productivity over delays. Not everyone, and not all the time. But in general, people want to perform effectively. Managers may have trouble recognizing this because we have never bothered to study human beings at their best.

Our efforts are usually attempts to reform people rather than to educate, enlighten, and appreciate them, allowing their best to emerge.

An exercise: design an organiztion that would produce the lowest levels of trust among its employees. Answer: make sure everything is locked up, install time clocks, introduce massive manuals of operating procedures, develop rules and regulations on everything. (These are how many organizations look!)

What's a high-trust organization look like? Reverse the flow of communication. Develop a set of shared goals. Build a team rather than concentrating only on individuals. Offer rewards rather than punishment. Stay in touch with what is happening on the floor. Pay attention to the concerns, issues, and personal problems of the employees. Enlarge people's jobs.

Instead of continuing to want to change these people, all those characteristics that may have concerned us at the outset become qualities we come to appreciate as simply being part of the way these people are. Absurdly, we find that we really wouldn't want it any other way.

When we assess people, we make lists of strengths and weaknesses, but we really need a list in the middle for those strengths that are also weaknesses, and weaknesses that are also strengths.

Strengths can become weaknesses when we rely too much on them. People who are exceptionally beautiful may fail to build up other qualities.

We sometimes say someone has a positive trait "to a fault".

If strengths are also weaknesses, the reverse can be true. A weakness can be a strength. Fearfulness can serve us well, making us cautious. Perfectionists can be our best workers. The insecure lead the need to achieve. An obsessive executive can inspire others.

Better managers recognize that it's more important for them to like their employees, than for their employees to like them.

The problem is not in raising the morale of the work force: it's in raising their own morale as managers.

Leadership is distributed among members of a group, and they in turn play such vital roles as taskmaster, clown, mother figure, and so on. Relying on one person - the manager - to provide all the leadership builds expectations that cannot be met. It robs the group of its powers, leading to overdependence on the manager.

Leaders who successfully move from one organization to another are able to do this because they define their task as evoking the knowledge, skills, and creativity of those who are already with the organization. They are especially able to elicit the intelligence and participation of group members who otherwise might not join the discussions.

The best leaders are servants of their people.

People who were most successful in achieving power did not dominate the group: rather, they served it.

Humility comes natually to the best leaders. They seldom take credit themselves but instead give credit to the group with which they have worked. They characteristically make life easier for their employees. They are constantly aranging situations, engineering jobs, smoothing out the processes, removing the barriers. They think about who needs what. They define their job as finding ways of releasing the creative potential that exists within each individual employee and in each group with which they work.

Good employees anticipate what the needs are going to be, then offer solutions not problems, ideas not complaints.

Children see events that adults have learned not to notice.

Much of the job of executive development is an unlearning process: getting rid of barriers to perception and wisdom and judgement.

Leadership is not a matter of expertise. We wouldn't want "expert" friends, "expert" wifes, lovers, or parents.

With the right kind of education, managers can gain better self-understanding, learn about their own interpersonal styles, their reactions to and impact on others, prejudices and blind spots, strengths and weaknesses. A better understanding of themselves and of their feelings gives all managers added trust in their perceptions, reactions, impulses, and instincts. If any one thing can be said to be true about good leaders, it's that they trust their instincts.

Managers become like good hosts at a party, making certain that everything works smoothly, taking care of the little things that make the experience a good one. The best leaders make their organizations places where their passion becomes the organizing force.

"Amateur" comes from Latin "amator", which means "lover".

Frank Capra: "Lost causes are the only ones worth fighting for." They tend to be the most important, most humane ones. They require us to live up to the best that is in us. To perfect ourselves and our world.

Whenever I have the arrogance or audacity to believe that I can reform people, I get nowhere. But when I fundamentally recognize that I cannot possibly accomplish those reforms, I can move ahead with a more humble posture and paradoxically perhaps then there is a chance that the situation can change.

Advice is cheap. It costs nothing to give. It's the simplest, quickest response to make when confronted with a problem. It addresses a situation without actually dealing with it. It is easier than understanding, listening, and analyzing.

"I already know how to be twice as good a farmer as I am." 

# articles

## beliefs

[At this company, we are family | Hacker News](https://news.ycombinator.com/item?id=36864476)
[At this company, we are family - pboyd.io](https://pboyd.io/posts/at-company-we-are-family/)

## failures

[Mistakes I've Made as an Engineering Manager | Hacker News](https://news.ycombinator.com/item?id=26216016)
[Mistakes I've Made as an Engineering Manager | CSS-Tricks - CSS-Tricks](https://css-tricks.com/mistakes-ive-made-as-an-engineering-manager/)

[🤦 ♂️ 8 mistakes I made as a CEO: Lessons learned the hard way | Product Hunt](https://www.producthunt.com/discussions/8-mistakes-i-made-as-a-ceo-lessons-learned-the-hard-way)

[Some mistakes I made as a new manager | Hacker News](https://news.ycombinator.com/item?id=35681322)
[Some mistakes I made as a new manager | benkuhn.net](https://www.benkuhn.net/newmgr/)

[Advantages of incompetent management | Hacker News](https://news.ycombinator.com/item?id=40876453)
[Advantages of incompetent management](https://yosefk.com/blog/advantages-of-incompetent-management.html)

## personality

[Ask HN: Was anyone working at Apple during Steve Jobs' return in 1997? | Hacker News](https://news.ycombinator.com/item?id=33288246)

[How much anxiety should I be feeling after moving up to manager? I'm actually dreaming about our systems going down.](https://old.reddit.com/r/networking/comments/15qxup4/how_much_anxiety_should_i_be_feeling_after_moving/)

[What Do People Need Most From Leaders?](https://www.gallup.com/workplace/655817/people-need-leaders.aspx)

## Know-How - by Ram Charan with Geri Willigan

You will be constantly tested for your know-how to lead your business in the right direction. Will you be able to do the right things, make the right decisions, deliver results, and leave your business and the people in it better off than they were before?

Can you position your business by finding the central idea that meets customer demands and makes money? And, as will increasingly be required, can you appropriately reposition it?

Are you able to pinpoint external change by detecting patterns ahead of others and put your business on the offensive?
Do you know how to lead the social system of your business by getting the right people together with the right behaviors to make better, faster decisions and achieve business results?

Can you judge people by finding their best talents based on facts and observations and match them with a job?

Are you molding a team by getting highly competent leaders to submerge their egos and coordinate seamlessly?

Do you know how to develop goals by balancing what the business can become with what it can realistically achieve, not merely looking in the rear-view mirror and making incremental adjustments to what's been done before?

Can you set laser-sharp priorities by defining the specific tasks that align resources, actions, and energy to accomplish the goals?

Can you deal with forces beyond the market by creatively and positively responding to societal pressures you don't control but that significantly impact your business?

Know-How is about what you must both do and be to lead your business in what is shaping up to be the most challenging business environment in decades. It plants business leadership squarely on a foundation of profit and loss, capital utilization, resource allocation, productivity, and customer satisfaction while never losing sight of the fact that leaders are human beings.

Successful leaders learn, practice, hone, and refine the know-hows until they become natural.

Know-hows aren't taught in schools, and cultivating them isn't easy. But over time, with lots of development, the know-hows become automatic, instinctive, and superb, and judgment improves.

It's important to practice the know-hows through a series of deliberate, appropriately challenging job assignments, combined with self-reflection on your personal traits. That's how leaders are made.

The ways leaders develop and deploy the eight know-hows are especially influenced by a handful of them: ambition, drive and tenacity, self-confidence, psychological openness, realism, and an insatiable appetite for learning.

Ambition - A desire to achieve something visible and noteworthy propels individual leaders and their companies to strive to reach their potential. Leaders need a healthy dose of it to push themselves and others. But ambition can be blind. That's when you see leaders making flashy acquisitions that are financially unsound or setting attention-getting goals or taking on more priorities than the organization can handle out of a desire to do everything. Overambitiousness, combined with a lack of integrity, can lead to undesirable behavior and even corruption.

Drive and tenacity - Some leaders have an inner motor that pushes them to get to the heart of an issue and find solutions. They drill for specific answers and don't give up until they get them. Their high energy is infectious. They consistently drive their priorities through the organization. They search tenaciously for information they're missing and keep tweaking their mental models until they arrive at a position that works. But drive and tenacity can cause a leader to stick to a plan that isn't working or to outdated assumptions or an investment that is no longer promising.

Self-confidence - You have to be able to listen to your own inner voice and endure the lonely moments when an important decision falls on your shoulders. You have to be able to speak your mind and act decisively, knowing that you can withstand the consequences. It's not a matter of acting tough. It's having a tough inner core, or what some refer to as emotional fortitude. Underlying fears and insecurities can be just as detrimental to your know-hows as can excessive self-confidence in the form of narcissism or arrogance.

Some leaders need to be liked. They therefore tend to go easy on people. They have an especially hard time dismissing people who have been loyal to them. Such leaders often find their own progress slowed because they promote people for the wrong reasons, tolerate nonperformers, and allow the social system to corrode.

Thinking encompasses a wide range of altitudes from the conceptual to the specific, they have a broad cognitive bandwidth, meaning they see things through a wide lens, and they are good at reframing issues and problems, looking at them from various points of view.

But your use of the know-hows is better when you're able to do both: think in terms of concepts, but also drill to the specifics. You see this ability in leaders who ask probing questions that hit on exactly the right points or unearth the critical but unspoken assumptions, and in those who can cut through complexity.

A broad cognitive bandwidth allows you to take in a wide range of information and see things in their broader context. You can take in more complexity, and see the interconnections. You're more likely to pick up on trends outside your industry that affect the positioning of your business and create new growth opportunities, and you're better able to see the business and its social system holistically, rather than as separate functions.

But even if your positioning is on the money today, there's a good chance it won't be tomorrow. Positioning is not for eternity. The frequency, depth, and abruptness of change in the world today means that you will be frequently shaping and reshaping your business.

Spotting new opportunities for profitable growth, resegmenting markets, and deciding which technologies to adopt.

The clarity and specificity of positioning of a company in the mind of the consumer, employees, and other constituencies is paramount.

Too often a shift in positioning (sometimes originating because of the change of company leadership) in a relatively stable environment can cause a permanent blurring of the company's value proposition in the eyes of customers.

The early warning signals come, for example, when customers start going somewhere else.

It's easy to see why people working in an industry for many years can develop psychological blockages and fail to see bigger trends. For example, a veteran newspaper leader who is overly optimistic and too self-confident will see the precipitous decline in one major source of revenue as an aberration, rationalizing that the business is just going through a flat period.

Figuring out what the new composition of revenues will be, from what sources, and what the new cost structure will be to continue to make money.

You have to be aware that in such an uncertain situation, there's a high likelihood that the behavior of some players may be totally irrational.

You have to be open, receptive, and active in searching for the signs that the business is being shifted or needs to be. You need to be surrounded with people whose conversations with you help you wrestle with these issues in a brutally honest manner.

Regular visits to client CEOs and business leaders provide a stream of new insights. Whitman himself made 234 of these personal visits by early 2006. Such closeness to the market will help him and his team detect early on any breaks in the external landscape and whether and when it will be time again to reposition the business.

He had been asking, "What costs can we cut?" He realized that a better question was "Where could we win?"

Early warning signals that the positioning of your business may need to change to take advantage of emerging opportunities:

Nascent industries emerge.
Nontraditional competitors start to appear.
The positioning of a key competitor changes.
The rise of new customers.
Consumption patterns are being influenced by affordable new offerings from new technologies (think iPod).
Customers are defecting.
Loss of market share in select key segments.
Emergence of new business models and new management models.
Pressure on profit margins.
Unexpected decline in cash flow from operations.
Decline in customer satisfaction.

Only by looking out far over the horizon and taking into account developing trends that may not seem directly relevant now can you really do the kind of analysis necessary to prepare for rapid change and new opportunities. You have to look at your business from the outside in.

How would it all play out? Seidenberg had to think through all those nonquantifiable factors, sifting, sorting, and selecting what information could help him decide what will prevail, in what conditions, with what timing, and with a sharp focus on changing customer-buying behavior. In addition he had to take into consideration competitors, emerging coalitions of rivals, and special interest groups.

One way to become effective in the know-how of seeing emerging patterns is to be an active listener who continually searches for what is new and different. Seidenberg has said that in every conversation he looks for ideas he has never heard before.

Recognize how you have obtained information in the past. Did you seek it out, or did you just let it come to you?

Reading each item carefully and slowly and then thinking about what it means for your company and your industry. What is changing and for whom? Where is the opportunity in that change and for whom? It's a simple exercise that over time helps condition your brain to detect patterns from these observations and what they mean for various businesses and industries.

In my observation, people who create organic growth that is profitable and sustainable connect the dots sooner and are on the offensive.

Seven simple questions can help you sort through and detect patterns in the complex world around you:
1.What is happening in the world today?
2.What part of my frame of reference has worked for me? What hasn't worked for me?
a.When you experience a failure in detecting a change - and you will - you need to reflect on why you missed it.
3.What does it mean for anyone?
4.What does it mean for us?
5.What would have to happen?
6.What do we have to do to play a role?
7.What do we do next?

Leaders who connect the dots:
Have a methodology for anticipating and detecting breaks in the continuity of the external landscape.
Imagine one or more pictures of the future and pinpoint the gaps that make the picture incomplete.
Have a reliable, diverse social network - both inside and outside the business.
Talk to their network for ideas about how to close gaps that they identify.
Have the personal imagination to construct patterns from emerging disparate trends, always searching for the missing links and missing ingredients.
Are psychologically self-aware of potential bias on their part or that of people they associate with to be overly optimistic or pessimistic, thereby distorting a realistic perception of external trends.
Connect patterns of change with the question of whether the positioning of the business could become irrelevant or obsolete.

Perhaps the biggest untapped opportunity for your success as a leader is shaping the way people work together to deliver the numbers. Your own performance depends on your ability to get other people to commit to and deliver their common goals.

Understanding the social system of your business is the best way to get a handle on the otherwise mysterious subject of managing and changing how people work together to meet ever-changing business requirements.

Managing the social system has two parts. You have to be able to determine what critical decisions and trade-offs must get made, and by whom, to accomplish your business goals. Then you use that insight to design disciplined, routine, regularly scheduled meetings - I call them operating mechanisms - to bring the right people together at the right frequency with the right information to make those decisions.

Shape the content of these discussions and ensure that the right behaviors are taking place in them and the output links to results. In short, you have to actively design and lead the social system of your business.

A leader with this know-how will always investigate the social system to see if it is the source of the problem and take specific steps to fix it.

Map your operating mechanisms, ensure that each of them is geared around a business result, and diagnose how each of them is actually working. If new ones are required or existing ones are obsolete, it's your job to change them. And if the people are not having the right discussions in them or behaving in the right way, it's your job to correct the behaviors, using persuasion, power, and rewards, whether money, recognition, or promotion, as necessary.

That's how the social system changes - through your conscious actions in designing and redesigning the operating mechanisms and conducting the dialogue in a way that shapes people's behaviors. As you do this repetitively, with discipline, you change the quality and substance of business decisions, and because the behaviors that get shaped in the operating mechanisms carry over to people's everyday work, you sustain a change in how people work together. With this know-how, you accomplish the elusive goal of culture change and develop the ability to deliver on commitments and achieve business results.

What was far more important was what information is exchanged, how much freedom is created for people to opine, what new information is brought from outside, how candor is valued by the leader, and the know-how of the leader to draw everybody in, surface conflicts, and get the group to be decisive without making poor compromises.

You also have to establish and enforce what behaviors are acceptable and which are not. You do this through conducting dialogue. You have to be able to perceive when a person's behavior is going off the track and have the emotional fortitude to correct it face-to-face, often right there on the spot. Through dialogue, people can see what you, the leader, think is important.

1.What is the purpose of the existing operating mechanisms and how do they and their linkages combine to help deliver results?
2.Which ones should be kept, eliminated, or combined?
3.Which require a total redesign and a new way to lead them?
4.Are there new operating mechanisms that should be installed?

You will have to design operating mechanisms around your more important business activities, such as serving new markets and achieving new growth. Each operating mechanism must have a clear business purpose.

Using simple facilitation techniques - "Pat, I haven't heard from you yet"- he went out of his way to draw people out.

Short, frequent, content-rich meetings can be highly effective in distributing fast-changing information and are especially useful for staying in touch with the outside world.

When you need different business results, you almost always have to tinker with the social system.

He couldn't just set a goal and expect it to be delivered. He had to be sure the organization's social system was built for getting it done.

Asking what had happened the previous week and what the leaders were planning to do in the upcoming week, so the business was making adjustments in a much shorter time frame. In each subsequent meeting, he would ask whether the leaders had done what they said they were going to do, creating a sense of urgency and accountability to the group.

As Nardelli selected leaders, he kept a keen eye on their know-how in managing a social system and their tendency to be psychologically open, willing to be influenced by others, and intellectually honest in keeping the group focused on the business purpose.

Does Your Social System Pass the Test?
The built-in conflicts that are part of every organization are being surfaced.
These conflicts are resolved in a timely way by people committed to delivering results.
Information flows horizontally across silos and is not hoarded or deliberately distorted.
The right questions are raised so that you can look at your business from both "50,000 feet" (the big picture) and at ground level and conduct brutally honest dialogue.
Operating mechanisms are designed so that they result in high quality, timely decisions and help deliver the aspired results.
You know the points of intersection where operating mechanisms are needed for people to make trade-offs and share information.
Appropriate and continuous improvements are made in the working of the operating mechanisms: creating new ones, combining some, eliminating others.
Each operating mechanism is connected in an unfiltered way to sources of external information.
Leaders have the psychological courage to confront reality and shape behavior of participants in line with the value of the business. The right behavior and values are reinforced and those who deviate are dealt with.

You must take the initiative to provide opportunities for them to not only contribute to the organization, but also to be tested and hopefully expanded. If they reach a limit - maybe because certain know-hows didn't develop properly or personality traits got in the way - you then deal with this issue as well.

The usually way of deploying people's leadership talent is to start with a job opening and see who can fill it. But the know-how of selecting leaders and helping them reach their potential means focusing on people first, not jobs - actively searching for leadership talent throughout your organization, creating for those individuals career moves that test their ability to take on more complexity or learn new skills, and creating processes to do it on a disciplined, regular basis. You have to develop and improve your judgments on people, which means spending time and energy on it daily, weekly, monthly, not just during one-a-year talent reviews or succession-planning sessions. You have to create a view about the person's competence in the know-hows, but also look at him more broadly to see what makes him tick: what he loves to do, how he thinks, how he behaves around others. Then you can match the leader to the job in which that person will shine and strengthen business performance.

As you practice and improve your observational powers, you have to prevent your own psychological blockages from getting in the way or perceiving people accurately. You can't afford to lock into unrealistically positive or negative views of people, thinking "he can do not right" or "she can do no wrong," and discounting information to the contrary. People grow and change, and jobs continually evolve, so you have to be psychologically open to continuously update your judgments on people and their fit with the job.

See the person as a whole, over time, in a variety of situations, and work backward from what you observe to determine what that person's individual gifts really are.

Crosscheck your judgments by soliciting different viewpoints about key people.

First nail down the person's natural talents and tendencies, and then look for situations that will allow those things to develop and take off. If the negatives are really getting in the way of job performance or growth, you can give the person coaching to see if they can be corrected.

People learn as much if not more from adversity as from success. People who've had setbacks shouldn't be discounted without probing into the specifics of the situation.

The principles involved to mold a team of leaders:
Share numbers, reasoning, and results to shape a common view of the business and its context.
Have the psychological courage to confront behaviors that harm the team's effectiveness.
Anticipate, surface, and resolve conflicts.
Pick the right people.
Provide prompt feedback and coaching.
Recognize and avoid derailers.

It takes an enormous effect and sustained repetition to get every member of the team to arrive at the same point. At first team members will see and hear what you are saying through the lens of their job specialty and select only what seems to apply to them.

Develop an internal team dialogue in which each member contributes to the discussion.

But the value of a team and your ability to lead it is that a decision can be reached that allows everyone to voice an opinion, debate the merits, and the right choice emerges.

The group makes better decisions than individuals and no one person has all the information.

But people can be reluctant to offer opinions or comments in a group setting where they may be challenged or, worse, ridiculed. Those who do speak out can become committed too early to a position and be unwilling or unable to retreat.

Goals have to be of the right type and magnitude to be both achievable as well as motivational.

Unlike many leaders who set grandiose goals and implore others to achieve them, Immelt established aggressive goals only after he assessed how the organization might go after them. The granularity of the thinking makes all the difference. The goals were realistic at every stage, and realism eventually earns credibility, just as surely as unfulfilled promises destroy it.

The goals must be clearly defined with specific time frames at the start.

Sometimes the view from below is a wake-up call for high-level leaders.

Sometimes you might want to set goals that build the self-confidence of the organization. Usually that means goals that you are almost certain can be accomplished. When they are, the organization gets energized. Over time you can increase the goals as you simultaneously increase the self-confidence, and eventually you can begin setting stretch goals.

Stretch goals show people that they can accomplish more than they thought they could.

The point is not to get people to work harder. Rather, it is to get people to do things differently and thus raise the capability of the organization. Such a goal carries with it higher risks. Unless you do the mental gymnastics necessary to figure out what has to radically change, setting a stretch goal won't be credible and the organization won't trust you. You have to be sure that people are prepared to think differently and have sufficient resources to accomplish the goals.

Setting the right goals means frequently rethinking every assumption about the market, the competition, and the business environment.

Take a broad look at what is on the horizon two or more years out, then work backward to visualize what you think the organization can achieve in that context, both over the longer term and in the interim.

Priorities are the pathway for accomplishing goals. They provide the road map that organizes and directs the business towards its goals. When the priorities are unmistakably clear and specific, people know what to focus on and, therefore, what should get their attention, resources, and follow-through.

Goals are set at fifty thousand feet. Priorities are set at ground level where you must have the tenacity, attitude and willingness to probe the messy details to think through and define what the most important actions should be. Priorities determine how resources are allocated and thus have the potential for touching off clashes as resources are moved from one person to another. While the priorities must be absolutely clear, very specific, and, above all, doable, that isn't enough. Once set, you must repeat the priorities over and over again and follow through on them to be sure that people understand them, buy into them, and act on them so the organization executes them and doesn't deviate from the course the priorities set.

What is important, what is urgent, what is long-term versus short-term, and what is realistic versus visionary.

"A very important part of this process is to be very specific and very clear. We learned that you have to repeat things a lot. You have to create communication channels that have consistency to keep the priorities from changing. At first, people understand them differently depending on their mindset. You have to be repetitive and consistent until they all understand what they need to do."

"First you have to open up their minds and convince them you are listening. Too often in the past someone might say 'This is worrying me' and the leader would say 'We'll deal with that later.' Now we have to know to stop and say instead 'Why are you worried?' and work it out right then."

That's why clear, specific priorities with a time frame are so useful. They help build confidence.

Anyone can state a priority. It is only when resources are applied to it that it really becomes one.

People announce priorities but find it psychologically difficult to take resources from someone and give them to someone else. You need to have a process to ensure that the necessary shifts take place. You have to monitor in your regular reviews that the shift is continuing to happen and that priorities are being executed. 

## skills

[Be critical or be corrupted | Hacker News](https://news.ycombinator.com/item?id=32953111)
[Be critical or be corrupted](https://www.cenizal.com/be-critical-or-be-corrupted/)

[Be wary of imitating high-status people who can afford to countersignal | Hacker News](https://news.ycombinator.com/item?id=33942670)
[Be Wary of Imitating High-Status People Who Can Afford to Countersignal](https://www.robkhenderson.com/p/the-perils-of-imitating-high-status)

[The best leaders are great individual contributors, not professional managers | Hacker News](https://news.ycombinator.com/item?id=33843160)
[37 Years Ago, Steve Jobs Said the Best Managers Never Actually Want to Be Managers. Science Says He Was Right | Inc.com](https://www.inc.com/jeff-haden/37-years-ago-steve-jobs-said-best-managers-never-want-to-be-a-manager-science-says-he-was-right.html)

[Ask HN: Going from Developer to Manager. What should I know or learn? | Hacker News](https://news.ycombinator.com/item?id=18823616)

[How do you demonstrate the most important analytical skills for leadership?](https://www.linkedin.com/comm/advice/3/how-do-you-demonstrate-most-important-analytical)

[After my dad died, I ran and sold his company (2018) | Hacker News](https://news.ycombinator.com/item?id=40758767)
[After my dad died, I ran and sold his company (and I was completely clueless) – Anand Sanwal](https://anandsanwal.me/2018/06/19/dad-company-sale/)

[Ashton Kemerling](http://ashtonkemerling.com/blog/2014/01/14/managing-is-a-craft-too/)
(2014) Managing Is a Craft Too

# guides

## how to manage

[GitHub - LappleApple/awesome-leading-and-managing: Awesome List of resources on leading people and being a manager. Geared toward tech, but potentially useful to anyone.](https://github.com/LappleApple/awesome-leading-and-managing)

[Ask HN: What are good books/blogs to read for a first time CTO? | Hacker News](https://news.ycombinator.com/item?id=38803092)

[The CEO Library](https://theceolibrary.com/)

[Sam Harris](https://medium.com/growth-mindset-podcast/the-hard-thing-about-hard-things-summary-51ea0213e837)
(2017) The Hard Thing About Hard Things — Summary of book

## personality

[1 in 5 business leaders are psychopaths-here's why](https://www.cnbc.com/2019/04/08/the-science-behind-why-so-many-successful-millionaires-are-psychopaths-and-why-it-doesnt-have-to-be-a-bad-thing.html)

[The Perks of Being Misunderstood - by Chris Guillebeau](https://yearofmentalhealth.substack.com/p/the-perks-of-being-misunderstood)