The education of a Value Investor: Guy Spier

There are some ideas that, while relating to investing and belong to 'Penny Wise' blog, are so full of Life Lessons, and hence by default belong to this blog on personal growth. This post is one such.

I had heard about Guy Spier while reviewing the book 'Dhandho Investor' (Buy the book at Amazon) written by him and Mohnish Pabrai. You can read my review of the book here

This is a part of the 'Author Talks' series of Google Talks. Guy Spier is a Value Investor and has written the book 'The education of a value investor'. (Buy the book at Amazon)

This is a unique talk. If I expected full on maths, analytics, number crunching and investing strategies and PE Ratios, I was in for a surprise.

Do you suffer from 'Impostor Syndrome'?

According to Wikipedia, 'Imposter Syndrome', also called 'Fraud Syndrome' is a psychological phenomenon in which people are unable to internalize their accomplishments. Despite external evidence of their competence, people with this syndrome are convinced that they do not deserve the success that they have achieved. Proof of success is dismissed as luck, timing or as a result of deceiving others into thinking that they are more intelligent and competent than they believe themselves to be.

Based on their perception of control over their environment, the people are categorized into two groups. People with 'Internal Locus of Control' (ILC), have the ability to internalize their success and externalize their failures. They have confidence in their competence and they know that if they put in a well directed effort, they will achieve success in the end. The children with internal locus of control will attribute their success to 'Hours of work' that they put in.

Failure, for a person with 'Internal Locus of Control' is to do with the environment. They do not beat themselves over their failures. Since  they know that they can get success by putting in hard work, any failure will be attributed to the fact that 'they did not put in enough hard work'. This means that their perception that 'If I put in effort, I will succeed' is retained intact.

On the other hand, People with 'External Locus of Control' (ELC) will externalize their successes and internalize their failures. Any success, for them, is due to external factors like luck, like weak opposition or lack of competition. On the other hand, they are hard on themselves for their failures. Any failure, for them, is directly due to their incompetence or lack of their ability. They blame themselves for their failures and credit others for their successes. 

In her book, 'Lean In', Sheryl Sandberg proposes that, most often, women suffer from Imposter Syndrome. In a weird way, they blame themselves for their successes. They have internalized the notion that they are not as competent as men. So if they attain success, it must be due to some external factors like luck, destiny etc rather than their hardwork.

Not only women, even men suffer from Imposter Syndrome. I can tell from my example. Throughout my career, I have ran away from taking responsibility fearing that I am not competent. One of the best examples that I can give is when I felt that I was incompetent to take up the role of the Project Manager in ERP Implementation. That was till I worked under an average Project Manager and the customer opined that 'This project would have turned differently if Ramaswamy were the Project Manager'. In my career, I have shied away from being a 'Shift In Charge' because I felt that I could not play the role, I have shied away from being a PM (as discussed above), I have shied away from People Management....

All due to 'Impostor Syndrome'.

How do you overcome this?

One of the suggested approaches is to Write. Writing clarifies your thought process and brings out your contribution out in front. Writing will also demand that you put facts on the paper and not your emotions and your interpretations of the facts. That is very powerful. 

What should you write?

Write your CV. Build a story around your CV. Focus and highlight your achievements, however small they are. Remember, in your perception, they may be small achievements (since you suffer from 'Imposter Syndrome') but for others who are reviewing your CV, they will appear as what they are, important accomplishments.

So go ahead. Start preparing your CV now. Show the world the stuff that you are made of.

'Can't Do' V/s 'Can Learn'

From time immemorial, the experts have tried to classify people into different groups. There are the whites and the blacks and all shades of gray in between, there are Indians, Chinese, English and the rest, there are Europeans and non Europeans, there are pliant and aggressive people.....

The list goes on.

In my opinion, there are only two types of people in the world. They are the 'Can't Do' people and the 'Can Learn' people.

For instance, suppose I pose the same questions to two groups of people.

Can you do this job?

Both the groups begin their answer with 'I haven't worked on it...'. The 'cant do' type will say, "I haven't worked on this, I have only worked on this, this and this, I don't have the experience in doing this job and so I can't do it'. They assume that once they say yes, they are committing to this and people will later on come back and say, 'look, you told us that you can do this, but you are not able to. That means you were lying to us in the interview'. These people feel that you can apply for a job only if you know the nuts and bolts (and the bearings and the lubrication and the electrical circuitry..) of the job.

The 'cant do' type is internally controlled. They do not rely on the organizational resources to meet their skill development objective. They do not want to feel obligated to the organization for the support provided to meet their 'personal' career goals. They will pay from their pocket and do a certification program rather than utilize the organizational resources which would have been available to them. They feel that they are individually responsible for the work they are called upon to do and are sceptical about the quality of help and support available within the organization.

They always try to build up on their existing skill sets and soon become experts in their area. These people collect certifications in hoardes. They are recognized in their organization for their technical expertise and is looked upon to provide guidance and solve critical technical issues. Typically they are loathe to change jobs and rarely try to learn new skill sets in line with market expectations and requirements.

On the other hand the 'can learn' type will answer the same question somewhat like this. 'I have not worked on this job specifically but I have worked on this, this and this. Even though I have not worked on this area, it is closely related to the work I have done so far and it is easy for me to pick up this skills in a very short span of time. In addition to the technical skills associated with the job, over my past experience, I have picked up a lot of soft skills like communication skills as well as man management skills which are common across different jobs. Only thing lacking is my knowledge in this specific area which I am confident that I can learn in a short span of time.'

Approach of this group to skill development is one of collaboration and team work. They understand the potential of the organizational resources and enthusiastically tap them to meet their career and skill development goals. They understand the power of team work and use it to their advantage. These people continuously analyse the job market and plan and prepare for any new opportunity that may be available in the market. Their updated CVs can be seen in various job portals. They try to stay one step ahead of the market at any point in time.

What is the career strategy for these groups?

If you are a 'can't do' type, you might be missing out on some of the big opportunities that the world is throwing at you. You could be wrong in your 'linear' assessmet of your carrer opportunities. The flat world and the new economy offer much more scope for using the same skill set in multiple ways. For instance, if you are a domain expert / project manager in construction industry, in addition to the linear growth in your own industry, an IT organization with focus on construction industry vertical could be one such opportunity for you. This industry is constantly on the lookout for construction industry specialists and project managers, both skills of which you have in abundance. To get into this industry, you might have to learn some IT the knowledge of which is available cheaply in the market. You will come to know of this requirement only if you are constantly in touch with the market.

Another non linear opportunity could be to work for banks that lend money to the construction companies. They are on the lookout for domain experts who can assess the risk of the project and provide effective mitigation strategies. This role can be only played by domain experts who have spend a lot of time in the construction industry.

You could also use the power of internet to brand yourself. You can use blogs, networks and even yahoo groups to project your capabilities in addition to the ubiquitous job search portals. You can read a very good article on 'e-BRANDING YOURSELF' here.

As far as the 'Can Learn' group is concerned, they have to be careful about the 'Jack of all and master of none' syndrome. They have ensure that they stay for a sufficient duration in a specific job to pick up expertise in that area. Since they normally switch careers midway, they have to have a clear long term strategy and a vision of where they want to reach in the medium term to long term and plan their career switches accordingly. Moreover, they should always be able to integrate their career choices as enablers to achieve the above objectives.

One of the complaints about these people is that they use the organizational resources to upgrade their skills and then quit the organization. In these days of reference checks and background checks, this adverse reputation could significantly impact their ability to sell their upgraded skills in the market.

P.S: What type are you? What do you feel about this article? Is this useful? I would love to hear your comments.

More on Quality

How do you define quality?
Experts agree that it is very difficult to define quality. Essentially this is because of two factors. One, the idea of quality is linked to both physical and emotional aspects and two the perception of quality differs from individual to individual.
Most of us will agree that it is very easy to spot poor quality. Just look at the pot holes which have formed in the road two days after it has been laid and you have an example of poor quality of work. Or look at the amount of honking that you hear on the roads and you have a poor quality of driving. Or for that matter look at the vague sound that your bike is making as soon as it comes back from the service centre, and you have an example of poor quality of servicing!!.
Just look at the third example above, will you?
You are just hearing a vague sound in your bike. You are not even sure if it was there before it was given to servicing. You only know that the bike went for servicing and suddenly you are hearing / feeling a vague unidentifiable sound. Immediately you have decided that the servicing was of low quality.
This is an example of perception of poor quality linked to the mind of the individual. While the first two examples are linked to physical objects creating poor quality (pot holes on the road, unnecessary honking of horns etc) this one is related to the mental makeup of the individual and his 'vague sound tolerence' levels.
This is what makes quality so difficult to quantify. You can always identify poor quality. But can you identify good quality?
An incident which happened in one of our training sessions come to mind. The facilitator asked us to write down the name of the music system that each of us would buy if we had no money constraint.
All of us wrote 'Sony' as our first preference.
There you have an example of quality!!.

Lesson from Traffic Jam

Recently, while coming to my office in Whitefield (supposedly an outskirt of Bangalore!!), I was caught in a monster of a traffic jam. The traffic extended to either side like an ocean. Fortunately all the drivers followed the traffic discipline and patiently waited for the jam to clear.
Not this BMTC Volvo bus driver. Like a smart alec, he cut the lane, went over to the opposite side and totally flouted the one way rule.
Since the other drivers were patiently following the traffic rules, the other side was totally empty and he was able to completely bypass the traffic jam and reach the destination.
His action of breaking the traffic rules, however, started a chain. Soon almost all the vehicles crossed over to the other side following the mail culprit which was a Volvo Bus.
And soon enough, there was a jam on the other side of the road with the vehicles coming in the opposite direction unable to proceed
The original culprit who started this mess had managed to get his way. He probably is not even aware of the huge chaos that he has left behind.
This set me thinking
This is the way it normally happens in an organization. You have a challenging assignment which need your people to work as a team. You recruit this snazzy, fast talking , impressive recruit who promises the moon. He comes with impressive credentials and has loads of experience in this area. His CV shows a lot of movement from one organization to another and you nebulously wonder why he had to change many organizations, and you attribute it to his ambition.
This guy is good, he achieves the desired result in the given time and is quickly moving ahead in the organization. He is the darling of CEO and is considered to be a potential star in the organization.
The person who replaced this superstar is not able to meet the high standards set by his predecessor. This new incumbent is an organizational veteran with proven credentials in his previous roles and has been always considered to be a systems and process person. It is a surprise that he is not able to meet the impressive performance of his predecessor. The organization compares the new guy with his predecessor and finds the new guy wanting (didn't the previous incumbent face similar challenges and achieve stellar results?).
The organization wants to know why. Why is it that this obviously smart and efficient person is not able to meet the standards set by his predecessor? It can't be that he is incompetent. He has a very successful track record of managing similar situations. You decide to talk to him.
He informs you that the team is very low on morale. It is highly demotivated and absenteeism and attrition levels are very high in the team. Some of the stars in the team are reportedly fed up and are looking out for similar or better opportunities outside the organization. They feel that the organization do not care for them anymore.
Wasn't this the best team in the organization? Didn't it contain some of the best performers in the organization with reputation of thriving on challenges? How can this team be low on morale? What has happened?
The aggressive predecessor has managed to steamroll the team and meet his targets. His tight control ensured that the organization did not come to know of the damage he is causing to the team morale. The incentive system in the organization ensured that the person who achieves the target is given good incentives - as it should be. But the organization did not have a monitoring mechanism to ensure that the objectives are ethically achieved and in the light of an individual achieving the objective, the organization is also strengthened.
The predecessor is the Volvo bus. He bend the organizational rules and managed to meet his target. The organizational mess that he has left behind is the traffic jam.

One about 100% Quality in your work

I was attending a class where a faculty was talking to us about quality of the code that we write.
He put a question to the class for vote "Is 100% quality possible in your work?"
The class was unanimous in saying no. 95% Possible, yes, probabably we can stretch it to 97%, but 100% quality always, impossible.
Average is 80% to 85%, it argued. There is something known as human error, it pointed out.
The class argued its point with strong conviction.
After all the discussion was over, the faculty got up.
"You know, yesterday I went to the hospital for check up for my father's heart condition. The surgeon suggested Operation. Being a quality consultant that I am, I wanted to know what is the percentage quality of his work. He told me that it is around 90%. Human error made up the remaining 10%. His assurance is better than this class's who is promising 85% quality.
I think I should go to this doctor. What is your opinion?"
We were all silent.
"Why is it that when we go to a doctor, we expect 100% quality every time, whereas in your deliverables you feel that it is a stretch to promise 90% quality. If you can expect 100% quality every time from a doctor, who has come up from the same environment as you are, why can't your customer expect 100% from you?
We couldn't say anything

Lesson from my son.

We have recently shifted to a new house. My son, who is reserved by nature, finds it difficult to mingle with the children in the new block.
He says that he don't know any of the games that they play. He do not play cricket, badminton, football or any such games.
I decide to give him some advice.
"When you want to get into a group" I tell him, "you have to develop new skills that will ensure your smooth entry into that group. If they are playing cricket, learn cricket. If they play football, learn that. You have to start learning those skills that can get you into that group."
It suddenly strikes that the above advice is applicable to me as well.
It is like this. You see, I am an ERP consultant. In my organization, I am considered to be an expert in ERP. I am very clear on the finance domain and has the requisite skills that ensure a successful ERP implementation.
Recently I have been wanting to move out of ERP and move into general management cadre. I am looking for roles like delivery manager / practice manager etc. However, more often than not I was not able to communicate clearly what I wanted or why I wanted.
Suddenly I realize that what I am looking for is to enter into the group of senior managers, but I have not built up the necessary skills in terms of analytical capability, team development, ability to put systems and processes in place or the ability to see the big picture as well as the micro picture.
I am yet to develop the skills that will get me acceptance in the group of senior management.
I need to learn new skill sets.

Lesson on man management

Let me tell you the story of Prakash.
Prakash was reporting to me in my previous company. I had just taken over as a project manager and he had recently joined my team.
He came with good credentials. He had experience in marketing and had moved to my team because he wanted exposure to ERP which our team was handling.
ERP calls for thorough knowledge of finance and accounting. And Prakash had neglected them in his management school. He found it very difficult to learn.
Other than the above, he was good. He was a good communicator, a good person, and used to take initiative in almost all our team activities.
But he was not good in finance and hence not good in ERP.
He was a trier. He used to buy the latest accounting books and tried to cram finance. But it was not that easy and he was not particularly successful in ERP.
During the appraisal, I appraised him. I told him of his week points bluntly. I also told him of his good points. Being realist, he accepted it.
I gave him the impression that his appraisal was not very exceptional. I told him that he can expect a maximum of 3 rating. Though he was unhappy, he was realistic enough to accept this.
In the actual ratings I rated him 4. I did mostly because, I felt that he was a trier and he was good at a lot of other things than ERP.
After the ratings came out there was a perceptible change in Prakash. I suddenly found that he was able to pick financial concepts far more easily than earlier. A new self confidence came over him. His progress was an eye opener. It was almost as if someone, through faith in his abilities, have opened the hidden talents.
It was worth watching his progress.
Now he has moved on, and is now in a prestegious company in a good role. He is now considered very highly in his current organization.
We still keep in touch. In fact, we are now professional colleagues. You see, through his help, I got a very senior role in his organization.
Moral: Never underestimate the potential of an individual. In case of doubt, help him. You will develop and benefit out of your actions.

How to get the job you want?

Here are some tips on Job Hunting. Very effective tips I think.

20 tips to good presentation

Here are 20 tips for an effective presentation. Reminds me of our communications prof. at IIM.