Confessions of an Economic Hit Man by John Perkins
29th July, 2007
I have been trying to read a book for quite some time now but always, something happens which forces me to keep it back. The book is "Lexus and the Olive Tree" by Thomas Friedman. Historical reasons have been exams, finding another interesting book on loan or buying another book. The book talks about the power of globalization and the wonderful things it is doing to the third world.
This time, the reason for not continuing with that book was me buying anther book on my trip to Borders. It was "Confessions of an Economic Hit Man" by John Perkins. A thought provoking book, to say the least. While it was an amazing read, it has also raised so many questions in my mind. This book indeed forces you to think quite hard.
To give a brief overview of the book, John Perkins claims he was an economic hit man (EHM) - a breed of professional who work for various corporations but serve the purpose of stretching the boundaries of global empire perpetrated by the US. These people are never on the government payroll. Nevertheless, they are working for the government interest. For example, these guys will go to a third world country, study the economic prospects of the country and propose lofty projection of economic trajectory of the country in the next 25-30 years. Now, in order to meet the projections, the country needs power plants, infrastructure, water treatment system, housing, banking system etc all of which need immense amount of capital outlay. At that point, the EHMs get the loan approved from World Bank, US AID, IMF, ADB etc. All this while, the intent was not to let the country develop but rather to give so much loan to the country that they have no choice but default on the payment. As this happens, the US government will start laying out the list of things they need in favor of allowing them to default on the loan.The list might include items like setting up military base, accessing the vast natural reserve of the country, get into some kind of free trade agreement, open the economy, political support in the UN etc. This list is far from exhaustive. Every country offers a unique advantage and terms vary based on that.
Mr Perkins, supposedly, had this itch to write a book as his conscience was not allowing him to continue doing this dirty work.I do not want to get into the debate whether he is morally just or not. I know a lot of people who repent their deeds later even though they were enjoying it while they were on it.
Rather, I would like to understand the factors behind what's going on around the world. I wrote a post sometime back saying that even though I don't want to work for a bank, I might end up working for one, indirectly. Reading this book only reinforces that belief. Also, now when I read the Friedman book "Lexus and the Olive Tree", I will be more informed of certain events and prejudices.
When I ask myself if I believe every word he has written in the book, I believe that I am skeptic of certain events as they have been dramatized too much (but these events made the book an interested read) but I can not question the phenomenon Mr Perkins has brought forward. Finer details are trivial but the message which this book conveys is crystal clear. The corporatocracy does exist and permeating through nations faster than you can imagine. An example near and dear to our heart is the liberalization policy which the Indian government (under late Mr P V Narasimha Rao) accepted under IMF pressures. Even though it turned out to be good for our country in terms of development but that was the ideal case I could imagine when the EHMs succeeded in twisting the arms of a country under the pressure of debt. Thanks to the indigenous Indian companies which stood the test of the time and fought fiercely against the competition from outside firms. I guess I will consider this as one of EHM's failure! Mr Perkin, do you agree?
Final Rating : 7/10
"FedEx Delivers" by Madan Birla
18th April, 2006
Having read too many management books and accounts of how companies make it big et al, I did not find this book very capturing. Neither does it have the data centric approach what Jim Collins had in "Good to Great", nor did it had the amazing power of memoir writing what Gurcharan Das did in "India Unbound".
With all due respect to Madan Birla, who was instrumental in FedEx's Success in its critical years, the book doesn't have the power to capture your attention and at times, sounds too instructive. Every now and then, Mr. Birla proposes 4 principles / 5 ways / 3 not-to-dos and after a while, it becomes too difficult to catch up with it. Had the book been more light, it would have been a pleasure reading it.
Since I am a great admirer of FedEx and its practices, I could somehow sail through the book but this doesn't apply to people who are reading this book without any prejudice. The book does not have the charisma to generate FedEx lovers out of nowhere...
Final Rating : 3.5/10
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"The Wal*Mart Way" by Don SoderQuist
12th May, 2006
Totally Awesome !
If there is a soul who wants to know what is this Wal*Mart all about, this is the book to pick (besides "Made in America" by Sam Walton which is more of an autobiography than Wal*Mart Story). After reading this book, I started to respect Sam more than what I did after knowing him through his own eyes in his book !
The book begins with a soft introduction followed by listing 12 factors which led to the Wal*Mart Success story ( as per Don....the list obviously is what he thinks were the main reasons ). While the list may not be exhaustive but it sure is compelling.
After listing the factors, the book is neatly divided into 12 chapters. Yes ! you guessed it right...One chapter for each factor. Written in a part preaching-part memoir way, It is very authoritarian and humble at the same time. It keeps you on the toe and you want to know more about it all the time !
There are so many fine points mentioned in the book which I loved. Some of them are :
1) Quoting Don : " I wouldsuggest to you that nothing will demoralize those who work for you more quickly than when you no longer have an active knowledge of what's going on in the business"
2)Fred Smith, founder and CEO of Federal Express commented that every person, at one time or another in his career, will have five questions that he asks himself or heself.
a) "What is expected of me?" - What is my job? On what basis will you measure me? What am I supposed to be doing?
b) "How am I doing?" - Am I doing what you asked me to do? Are the results what you wanted? Is it good? It is basically getting a continual feedback rather than judging yourself with the year end evaluation.
c) "How can I get ahead?" - How can I be promoted? How can I take on more responsibility? How can I grow? How can I be challenged further?
d) "Where can I get justice?" - Where do I go when things are going badly, when I think I am being treated poorly, when I think something has been done unfairly?
e) "Is what I am doing important?" - Knowing if you are contributing to the well being of the organization
(I wonder if Fred Smith never asked these 5 questions to Mr Madan Birla as he never cared to mention about these in his book "FedEx Delivers")
There are numerous little examples and teachings which will simply put you in awe ! Like Sam declining to come to Cincinnati for meeting P&G CEO because the room which was booked was costing one hundred dollars a day!
These little things tells about the character of a person and what values he would have instilled in his company.
No wonder Wal*Mart has evolved as the largest company in the world and still growing like a start-up does !
A Must read !!
Final Rating : 7/10
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Good to Great
Long long time ago...reproduced on 10 Sep'06
Introduction:
Faced with the question – Can a good company become great and if so, how? (Probed by Bill Meehan, Managing Director of McKinsey & Company, San Francisco), Jim Collins embarked on a five year research effort, a journey to explore the inner workings of good to great.
Phase 1: The Search
A 21 member team formed by Jim Collins, working on the project, started the daunting task of sifting the Fortune 500 companies from 1965 to 1995.
Criteria for selection:
· The company shows a pattern of good performance (a cumulative total stock return no better than 1.25 times the general stock market for the fifteen years prior to the point of transition) punctuated by a transition point, after which it shifts to a great performance (a cumulative total stock return of at least 3 times the general stock market for fifteen years from the point of transition)
· It should be a company shift and not industry shift
· The company should have operations for at least 25 years prior to the transition point
· Transition had to occur before 1985 (so that 15 years cumulative returns can be calculated. This is where GE could not make it)
· Company should still be good enough (It should appear in 1995 Fortune 500) and having an upward trend in stock returns.
Several other criteria were applied and the screening was done at 4 stages.
Cut 1 1435 Companies Fortune Cut 2 126 Companies Stock Prices
Cut 3 19 Companies 11 more criteria
Cut 4 11 Companies Industry Analysis
Phase 2: Compared to what?
After 11 companies were selected for the research, “comparison companies” were also selected to facilitate comparisons. There were 2 sets of comparison companies. The first set consisted of “direct comparison” – companies that were in the same industry as the G-G companies with the same opportunities and similar resources, but did not show the leap from good to great.
The second set consisted of “unsustained comparisons” – companies that made a short term shift from good to great but failed to maintain the trajectory. In all, this gave a set of 28 companies: 11 good-to-great companies, 11 direct comparisons, and 6 unsustained comparisons.
|
Good-to-Great Companies |
Direct Comparisons |
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Abbott |
Upjohn |
|
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Silo |
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Fannie Mae |
Great Western |
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Gillette |
Warner-Lambert |
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Kimberly-Clark |
Scott Paper |
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Kroger |
A&P |
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Nucor |
|
|
Philip Morris |
R.J. Reynolds |
|
Pitney Bowes |
Addressograph |
|
Walgreens |
Eckerd |
|
Wells |
Bank of |
|
Unsustained Comparisons | |
|
Burroughs | |
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Chrysler | |
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Harris | |
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Hasbro | |
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Rubbermaid | |
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Teledyne | |
Phase 3: The research (What’s inside the BLACK BOX ?)
Once the companies were selected, the deep research began. 6000 articles dating 50 years or more, 2000 pages of interview transcript (with the business leaders of these companies), analysis, strategy study, acquisition analysis, executive compensation research et al became the became the back bone of the study and consumed 10.5 people years of effort
Phase 4: The Concept
Level 5 Leadership:
Compared to high-profile leaders with big personalities who make headlines and become celebrities, the good-to-great leaders seem to be totally different. Self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will.
First Who….Then What:
Good-to-great leaders DO NOT begin by setting a new vision and strategy. Instead, they first get the right people on the bus, the wrong people off the bus, and the right people in the right seats – and then they figure out where to drive it.
Confront the brutal facts (Yet Never Lose Faith):
Every Good-to-great company embraced what we came to call the Stockdale Paradox: You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties,
The Hedgehog Concept (Simplicity within the Three Circles):
Good-to-great companies do things which fit their hedgehog concept, the intersection of the three circles.
What are you deeply passionate about?
What you can be the best in the world at?
What drives your economic engine?
A Culture of Discipline:
All companies have a culture, some companies have discipline, but few companies have a culture of discipline. When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls. When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance.
Technology Accelerators:
Don’t use technology as the primary means of igniting a transformation. Technology was used as a catalyst but not as a reactant.
The Flywheel and the Doom
Those who launch revolutions, dramatic change programs, and wrenching restructurings will almost certainly fail to make the leap from good to great. Good-to-great transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment. The process resembles pushing a giant flywheel in one direction, turn upon turn, building momentum until a period of breakthrough, and beyond
Final Rating : 9/10