November is drafting month in American amateur triathlon.
With Ironman Florida, Clearwater 70.3 Champs and Ironman Arizona on the calendar for successive weekends, the online world is alight with drafting discussions. I thought that I'd share some thoughts on drafting, cheating and drug use this week.
Over the last 20 years, I have worked, traveled and lived around the world. Along the way, I have seen a wide range of cultures, ethics and approaches to business, sports and academics.
The first thing that I'd caution against is putting too much energy into seeking to solve the "problems" of others. Not everyone sees a problem and, more importantly, not everyone wants to hear an outsider's idea of a solution.
I rarely have a friend thank me for pointing out their lapses. Much more common is people thanking me for sticking to my own standards. Part of the reason that I rarely write about cheating is that I prefer to stay on message with a positive outlook.
We'll see how this goes... if you like to draft and use drugs then you might not want to keep reading...
I suppose a lot of us are talking about Wall Street, greed, CEOs, bankers, bonuses... much of the discussion that I read, and hear, centers around a lack of ethics on the part of people in positions of leadership. With crisis comes opportunity. We have a unique opportunity to improve our financial system.
I am going to write about business but this could just as easily be a piece on doping.
A lot of poor decisions are rationalized by a belief that the action was justified by the actor being a good person. Given that we each have to live with ourselves, it is reasonable to believe that nearly every poor decision is followed by a post-fact rationalization.
Once we start living a lie, even a small one, we can find ourselves on a slippery slope that eventually leads to moral ambiguity. Far easier to stay a mile away from "the line" then risk the public humiliation that comes from high profile ethical lapses.
During times like these, one can easily see the costs from ethical lapses but it important to remember that our current situation started with a series of small decisions where the benefits appeared to out-weigh the costs. Step by step, the situation progressed until we have a crisis caused by lack of enforcement, excessive leverage and skewed incentives.
So now society, as a whole, pays the price. People are upset and human nature will seek vengeance. I suppose this article is my attempt to help channel that vengeance towards productive progress.
I like to remind myself that we win (individually, and collectively) by maintaining high ethics. Over a lifetime, there is much financial gain to be had by being reliable and extremely trustworthy. Greater than finances alone, there is much love and friendship to be received. There can appear to be short term trade-offs but there is no long-term cost to avoiding false gods (easy money, sex, alcohol, pride, false performance...).
As humans, we need to be wary of situations that screw up our ability to think clearly:
As citizens (coaches, managers, leaders), we also need to consider the incentives that we are putting in place. Are we creating systems that reward cheating? When we experience a lot of undesirable outcomes then it is more effective to change the incentive structure, rather than punish a never ending line of cheaters.
It's for this reason that you'll never get the drugs out of a big money sport, until the money starts to leave because of the drugs. The money is the incentive and sport rewards performance. Speaking from experience, Investment Banking faces a similar challenge.
It is also why draconian penalties don't work all that well to clean up a corrupt culture. The people on the inside have spent years justifying their actions and likely see the rules as the problem. You don't need a code of silence to enforce a corrupt culture because human nature does the enforcement for you. By increasing the all-or-nothing nature of the outcome, massive penalties can make it more difficult, not less, to break the chain.
To really change a dysfunctional culture, one needs to change the incentives.
So what were the incentives that appear to have created our financial crisis:
Top of my list is leverage -- we had plenty of warning that allowing companies, and investment vehicles, massive amounts of debt was systemically risky. We tolerated laws and investment structures that created a massive shadow banking system. LTCM happened about ten years ago. However, we didn't recognize the need to change back in 1998. You'd have be be a fool not to see it now.
The regulations are going to come. If your livelihood, or business model, depends on plentiful leverage then you had better start thinking about your back-up plan. Industries that rely on easy leverage are going to be decimated. I wouldn't be surprised to see laws making hedgefunds illegal. There is going to be coordinated global re-regulation.
Once you reduce the leverage in a system, you immediately reduce the profits available from gaming the system.
I also suspect that we will see laws banning many unregulated financial instruments as well as statutory limits on personal and corporate leverage.
Next is lack of transparency and disclosure. The act of telling the whole world (or at least your board of directors, bankers, employees and shareholders) what you are doing can help clear the mind. Disclosure needs to be compelled because human nature works to keep most of us pretty quiet in group situations.
Compelling disclosure can protect highly motivated people from themselves. Make it a crime (punishable by fine) for a company to have off balance sheet vehicles. If you are not willing to hold an asset on your main balance sheet... then should you be holding it at all?
In the UK, it is a crime (punishable by fine) not to share conflict of interest information with fellow directors. The law goes even further in that one needs to share the conflicts of other directors, if one has knowledge. I suspect that the US has similar laws on the books. So I don't think that a bunch of new laws are required. Rather, I think that consistent application of a straightforward code of conduct is required.
Next is enforcement. How much money does a white collar crime need to involve before there is a legal obligation to call the cops? I asked that question the other day and a lawyer couldn't tell me. A manager could misallocate hundreds of thousands of dollars and there isn't any obligation to call the police. I was amazed.
There is too much judgement given to directors in how they handle ethical issues. The upper echelon of any industry (or pro sport) is a club, the key players know each other and many outsiders are keen to get a seat at the table. If society has a problem with the culture of that club then we need to provide incentives for insiders to clean it up.
Which brings me to public humiliation, the single best deterrent available. While it might be fun to "win" -- letting down our peers and being disgraced... human nature sees that as HIGHLY unattractive. Elites pay attention when those around them are caught in ethical violations. Imagine how Eliot Spitzer's kids felt -- one really needs to be drunk on hubris not to think through how that situation had to end up.
Forgiveness and rehabilitation -- I'm not from the ban-them-for-life school of ethical punishment. My preference is to disclose; criminally convict (where appropriate); fine; ban for a reasonable period; and log the information on the public record.
Coming back to where we started this article, good people can make bad decisions and a lot of good can flow from a crisis that resulted from ethical lapses. Some examples:
Campaign finance reform -- McCain's actions on reform appeared to flow from the Savings & Loan crisis. Regardless of one's politics, you have to admit that John McCain has achieved tremendous good for his country. Did you watch the video? They should open each session of Congress by having the legislature watch the Obama campaign's "documentary". The 13 minute clip scared the crap out of me and I'm not even a politician.
Cycling reform -- David Millar (our photo this week) has become an advocate for cycling reform. He was caught, he did his time, his actions are on the public record -- now he appears driven to change the direction of his sport.
There are many more examples of good people getting caught (or not caught), coming clean then becoming a positive force for change (via personal foundations or crusades).
I suspect there are many CEOs and bankers that want to do the right thing for themselves, and their country. What we need to do is reduce the leverage they have available; limit their ability to sell unregulated products; enforce existing regulations; and publicly pursue/ban those that choose the break the rules.
Finally a few specific items that have been swirling in my head.
Mark to market accounting waivers -- John Mauldin is calling for the government to waive the obligation for companies to mark asset values to market. He is making his case by selecting certain assets that are clearly trading below long term value. We are in this mess because of a culture of non-disclosure, hiding bad assets and moral hazard from companies not having to live with the results of their decisions.
Advocating changing the rules, hiding the problem, giving banks time... that is how we got into the mess in the first place. John is a great writer, I read his letter every week, he has most things right, but I think he's got this one wrong. If you don't want to mark assets to market then don't buy those assets.
Compel full, and open, disclosure to create trust. If banks are allowed to hide their problems then we will never get the interbank market going again. Get everything out in the open and, where necessary, grant short-term waivers for capital adequacy ratios.
Government investments in bank equity -- our governments are shortly going to guaranty all our banking deposits as well as invest massive sums of capital into the balance sheets of our banks. I was amazed when Secretary Paulson said that the government wasn't going to seek board representation, or other rights. Would Goldman Sachs invest $700 billion without board representation, veto rights and disclosure requirements?
I suspect that the government is going to get taken to the cleaners on its investments. I couldn't invest $700,000 effectively if I had to rush -- $700 billion? It is likely to be a mess either way.
The money is the incentive, we must drive change at the same time as investment. As an investor, your power is strongest the moment before you invest. Once you've got a couple billion in a company, human nature creates massive inertia. This is a unique opportunity. There will be zero change if not driven by the governments that are saving these institutions. I take a lot more comfort in the British approach, so far.
Next week, I'm going to change direction and talk about Fit Pregnancy! Monica says that she really appreciated reading articles that athletic women wrote about their baby experiences. She's not a writer (but she makes really nice handmade cards...) so you'll have to read the story second-hand from Papa G.
Our photo this week is Monica’s Buddy Andrea (MBA). MBA has an M.B.A. from Harvard. She came over to
When we discussed my piece on Start-Ups, Andrea noted that hardly anyone takes the first step of creating self-awareness. At HBS, they had an entire course on the subject. Most of us can’t go to Harvard but we can review the article and consider its best points.
Drucker’s article notes that it is extremely tough for us to figure out ‘where we belong’. He suggests that we should start by noting where we don’t belong as well as the situations that don’t suit our strengths.
He counsels that we enhance our strengths while working to eliminate our bad habits (rather than our weaknesses). There is much greater return from supporting top performers than “fixing” mediocre players.
Focus on being polite, trim the bad habits and place ourselves in situations where we can use our strengths.
He points out that we all have intellectual arrogance that limits our success. I spent two hours thinking about the areas where I am intellectually arrogant. I really had to think. I am far from perfect but everyone else’s limiters came to me first!
Probably my #1 arrogance is advisers that have never “done it” – I place a huge emphasis on learning-by-doing. When I see a man promoting himself as “the world’s greatest” adviser on a subject that he has never personally experienced, I have to work (very hard) to give any credibility to his experience. That’s a shame because some of these advisers have spent countless years studying the best performers. They probably know a thing, or two!
To know, but not to do, is not to know.
I surround myself with do’ers. There is an important role for the academics – those of us that have “done” are biased by our experience – combine us with people that are biased by their textbooks and we might breakthrough together.
If you look closely at the Endurance Corner consulting team then you will see my efforts at diversity. Still, we are a bit young and too male. We are working on it.
In my youth, my greatest limiter was a core belief that tact was a sign of weakness. In my 20s, all that mattered was performance. Now, if you are a high performer then you can get away with that for a while. However, we pay a high price in terms of ultimate success and effectiveness. I was fortunate that my first boss was a lot like me and found my flaws entertaining.
Values – we tend to think of values and ethics as being crystal clear – black/white or right/wrong. Drucker makes the point that, in life, we can find ourselves in a situation where conflicting values are both “right”. I will give you an example with a list of my business values.
This is what Gordo Incorporated stands for:
Consider the opposite of the above points – Snazzy Company Limited values:
In one job, I would be happy – in the other… a disaster. It is important for me to remember that the other company isn’t a “bad” company, just different.
Armed with your strengths and personal values you can decide if an opportunity makes sense for you. Before signing on, use your self-awareness to lay out what is required for you to succeed.
The other interesting part of the article is a description of the different ways that people communicate, learn and work. It probably won’t surprise you to learn that I work/learn by writing. At McGill, my class notes were the Gold Standard. The “listeners” used to photocopy them for subsequent review.
I have had two successful business relationships with extreme examples of listeners/talkers. Until I figured these guys out, I used to bang my head because they “never read what I write”. The way to crack the code is to call them on the telephone – I used to call these guys from 30 feet away!
If you are working with people with a different style then acknowledge it. We are paid to be effective, not right. Andrea's tip here is to remember that, more than changing your style, respect and adapt to the styles of our co-workers.
More in the article – with great examples.
Feedback analysis – Drucker’s feedback tips are HIGHLY valuable. Each time you make a key decision – write down what you think is going to happen and revisit it 9-12 months later. I have eight years of personal business plans and learn a lot from them.
Some things that I noticed:
There is much more in the article. It’s only ten pages. A small investment of time to get an edge on ourselves!
Phew, running long again! I will be short on facilitation.
The best thing that Andrea pointed out to me was that in any situation there is the person acting and the person facilitating.
As an adviser, many clients come to me for the professional OK to continue with their bad habits. At one level they want success but, at another level, they want acceptance/love and the OK to keep rolling just as they are. So we start by acknowledging what is working and good in their lives.
Without a basis of trust, we can get fired when we refuse to facilitate. When we fail to surround these difficult conversations with manners and tact, they often fall on deaf ears. With my inner circle, I often have to wait a year, or more, for an opening to share feedback. As a bonus, waiting saves me when a rush-to-action is inappropriate.
My second thought was to consider the people, and firms, that I facilitate. Whether we like it or not, our actions have a multitude of direct/indirect impacts. Questions that I considered:
Andrea’s final tip was “Stay on message and stay positive” – with that in mind, I won’t share my answers. One of the things that I am working on is my need to “be right” all the time.
Until next week,
That said... we did bump into a lawyer's strike yesterday at Place Vendome -- completely shut the neighborhood down! The French do appear to enjoy a good strike. Notwithstanding a little labour unrest, France is a fantastic place and we truly enjoyed ourselves.
As I hit the "publish" button on this piece, we're off to the airport to begin our journey to Hong Kong and onward to Australia. Next week I will be writing you from Noosa, Queensland.
When I think back over my adult life, the person that I would have been most worried about inheriting capital is "myself". The shakiness of my personal motivation from 17 to 32, was hidden from everyone other than myself -- I have managed to get quite a bit done over the years but it easily could have gone far, far differently. A benevolent chunk of cash at just the 'right' time could have had seriously 'wrong' consequences.
Further, knowing that I wasn't solely reliant on my own resources would have reduced my desire, and need, to take care of myself.
Our ability to responsibly allocate capital is a direct result of our experience with learning how to accumulate it. It is challenging to teach prudent financial management to people that have never had to manage finances.
A Valuable Legacy
Ethics, self-worth and a life with meaning -- if I had to choose three things to wish for my kids then those are a good starting point. None of these points require a trust fund.
The most powerful success factors in my life have come from education, social networks and life experiences. A legacy with meaning is one that shares the lessons of my life.
What does this have to do with motivation?
***Achievement is linked to maximizing our capacity to work, then working.
***Self-worth is linked to favorable outcomes from work done ethically.
***Wealth is linked to favorable financial outcomes from capital invested wisely. True wealth is a function of personal freedom, not merely financial assets.
***Happiness correlates reasonably well to personal freedom -- especially, when that freedom is used for ethical work.
I haven't seen a direct correlation between wealth and personal ethics. Going further -- unearned wealth severely challenges both personal ethics and our sense of self-worth. I often ask myself what I did to deserve such a wonderful life and have tendencies to make my life more difficult (for no appreciable reason).
In our society, wealth provides a shield from being confronted by the effects of weak personal ethics. The frequency that we make poor choices is linked to our ability to tolerate poor outcomes. An example relevant to my early career, getting drunk and being unproductive at the office fails to be an option if our lack of productivity gets us fired. Inherent ability masks a lot of counterproductive behavior -- as Scott Molina notes... "you can justify an awful lot when you are winning".
Most of us will do the minimum to achieve our personal goals -- it is for this reason that challenging goals prove so useful for many of us.
Here's what I'm working towards:
Off to the Southern Hemisphere,
If you’ve surfed my new coaching website then you’ll see a few pictures there. My web guy, Brian Johnson, chose them and I was surprised that he managed to capture some of the my favourite memories. Cool.
In one of the photos I am handing over a framed IMC finishers photo to John “Dr. J.” Hellemans. The Docta’ is a guy that I hold in very high regard and I consider him one of the finest people I’ve ever come across. So I was pretty stoked to be welcomed to the Wall-of-Honour that sits behind his desk.
Since I am kicking back and reminiscing, here are some key things that I learned from John…
Heart rate monitors, powermeters, pace… all of these are meant to help the athlete dial in their subjective perception – learn how different efforts feel. Gizmos support our ability (and responsibility) to learn.
We were kicking around training protocols in 2003. My approach had concerned him a bit because I was pretty much always shelled (but happy). In my lactate tests, I had zero top end for over a year. Like all great coaches that I’ve known, even if he disagrees with a protocol, he has a respect for results.
Offering me comfort when I DNF’d Ultraman in 2003. He had been worried that the race was going to finish me off after pushing very hard through IMC2003 fatigue to prepare.
The first quote was explaining, in a way, why he still thinks that my approach to IM is risky.
The second quote was a form a reassurance, in a sense. I was a bit worried about the way a buddy was approaching his race. John’s advice was that ultimately we must do what we think is best for ourselves – I like that approach because sink/swim I have ownership for what I am choosing to do.
A doctor’s reminder that as a coach we must be wary of control factors in any advisory relationship. It caused me to think deeply about the plan I was offering a friend. I tried offering him “what I thought he needed” – turned out that didn’t work to well! So we took a break then went back to what my heart knows works. Hopefully, that will turn out to be what he needs!
But the #1 thing that Hellemans told me – I haven’t needed it yet but perhaps that is because I think about it so much. With regards to honour, drugs and cheating:
Sitting here more than a year past my life best performance. I understand more fully what he may have meant.
I think that folks tend to lose their moral compass when they start to define success relative to others than themselves. It’s also a key to enjoying the work required for success. Whenever I have shifted a training emphasis from “enjoying what it takes to improve” to “doing the training required for a target performance” – things have become a lot tougher.
A good safety mechanism is working on holding our intent to ethically overcoming ourselves. There is a clear risk if we lack purity of intent because short cuts work, in the short term. In the long term, you lose a lot more than simply knowing that you ethically quit.
There is an element of irrational obsession required to achieve a high level in any field, particularly ultraendurance athletics where performance goes far beyond any reasonable view of health or well-being benefits. Of course, there is a counter argument put forward by many-a-compulsive athlete, such as myself, that the alternatives to excessive exercise aren’t all that palatable to me, or those around me.
Anyhow back to John. As a physician I think that it is fair to assume that he’s armed with a wealth of knowledge on both sides of the sports ethics fence.
As my own knowledge of the physiological requirements of a blazing fast Ironman have grown…
As my evangelical dedication to the training required to improve has borne fruit…
…I’ve come to realise that a well trained athlete in a thinly competitive sport such as Ironman triathlon can easily move from international class to world class with a single cycle of PEDs. Nothing new there as we have all seen what PEDs do to a world class athlete.
I suppose the difference is that I never thought that the dilemma could reasonably apply to me. I always figured that I’d be 30-60 minutes behind the best. Now I see that in my best shape, I was likely 5-15 minutes behind. That gives me a fuller appreciation of how it can be tempting.
Not related to John but that reminds me of something – Scott was telling me about something that bothered him the other day. Perhaps he’ll write about during Epic – I hope so because he’s pretty darn entertaining when he goes off about something that he feels strongly about.
What drives him a bit crazy is reading comments from folks that have never come close to achieving their athletic potential debating ideal protocols for relative mediocrity.
Greatness is there, if we’d simply wake-up and commit ourselves to working our butts off.
As you can see, I am still working on John’s internal calm while letting athletes make their own mistakes.
That’s another of my favourites.