That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back

Thomas Friedman is a three-time Pulitzer-prize winning New York Times columnist, and the author of five best-selling books. Michael Mandelbaum is professor and director of American Foreign Policy at The Johns Hopkins University School of Advanced International Studies, and author or coauthor of 12 books.

The thesis of this book is that the United States created a climate of education, innovation, and opportunity that made it the world leader that is was through much of the 20th century. But by falling behind in education and losing its optimistic stance, America is rapidly losing that lead and must make some dramatic changes to regain it.

There is hope, however, both because of opportunity (through world changes driven by technology) and problems facing the world (climate change) where America could step up in a bold way. To do this would require America to address policy changes that would put more emphasis on education, address infrastructure issues, and face climate change realistically. Individuals also need to step up to recognize what it takes to succeed in this new 21st century world. They must take responsibility for their careers in a new way and not be distracted by successes of the past. The challenge of getting a good education, particularly in math and science, amidst the distraction of our media age, must be faced family by family, person by person.

Readers familiar with Friedman’s other books will immediately recognize both his style (enthusiastic, fast paced, lots of personal illustrations, wordy) and the content. There are lengthy summaries of his previous works on how technology is reshaping the world (from The World Is Flat) and the impact and opportunities of climate change (from Hot, Flat, and Crowded). Like the other books (particularly The Lexus and the Olive Tree) we also go with Friedman on his jaunts around the world, meeting people from all over the globe.

What Mandelbaum seems to bring to this book is more focused thought on what all of this has to do with policy issues, both foreign and domestic.
The authors have found a way to handle joint authorship combined with lots of personal anecdotes (mostly from Friedman it seemed, though I didn’t count them) by giving the anecdotes in the third person (“When Tom was in Bangalore he …”). I found this very readable and effective.

This book is easy to criticize. Some won’t like the political orientation of the authors (probably slightly left of center), the wordiness of the book, or the repetition with previous books. But I found this to be an important challenge particularly for those who are early in their careers, to think about their own need for continuous learning and change. The final chapter was sobering. The authors were asked if the book has a good ending, and they basically concluded it is up to us to write that ending.

I recommend this book.

Reviewed by Al Erisman

Daniel Kahneman is the emeritus Eugene Higgens professor of psychology and the emeritus professor of psychology and public affairs at the Woodrow Wilson School of Public Affairs, both at Princeton University. He is author or coauthor of six other books, and the winner of the Nobel Prize in Economics (with Amos Tversky) for work in decision theory.

The major premise of the book is that the human brain operates as if (because this is the way the brain behaves, not the way it is structured) it had two systems. The first (he calls system 1) responds quickly, intuitively, doing pattern matching. The second (called system 2), is the rational part of our brain that responds more slowly and carefully, sometimes referred to as the rational response. It is the relationship between these two systems, the subject of numerous experiments throughout the book, that may be surprising to most of us who think we are rational. System 2 is “lazy” and allows system 1 to make most of our decisions for us. When called upon, it often develops a rational argument for the response of system 1, whether or not that response was correct.

The implications of this relationship are developed throughout the book and shows many ways we can go off track. Here are a few examples:

We are prone to gamble to avoid losses while choosing the sure thing for gain. We respond differently to choices depending on how they are presented, even though the options are logically equivalent. Here is an example:

1. Would you accept a gamble that offers a 10 percent chance to win $95 and a 90 percent chance to lose $5?
2. Would you pay $5 to participate in a lottery that offers a 10 percent chance to win $100 and a 90 percent chance to win nothing?

A much higher percent of people would agree with 2 but not with 1!

We are distracted by meaningless “facts” when we make decisions. Those who were asked if Ghandi reached 144 years old and then asked to estimate his age when he died guessed a substantially higher age than if they were first asked if he had reached age 35.

Judges were shown a die before sentencing criminals, and those sentenced after the judge saw a six consistently received longer sentences than after the judge saw a three.

Our mind wants to identify cause and effect for almost any situation, when often the facts can best be explained by random events. No football commentator can finish a game without “explaining” why one team lost or won, when it may be a matter of inches and luck. No stock analyst can see a drop without explaining it when the explanation may be completely bogus.

The experiments are endless, it seems, and mostly fun with a serious overtone.

The author even acknowledges that, despite studying this field for many years, he is not very good at identifying when he is jumping to an invalid conclusion, though he has gotten better in seeing this in others! In several places, he inadvertently illustrated this by trying to explain, for example, why one person would buy a stock that another person was selling. I marked several places where I thought he had leaped to a conclusion not supported, but after reading the whole of the book concluded I was less sure I was right!

In my favorite chapter (22) the author worked together with one of his critics to explore the way the context of each person’s work had led them to different conclusions, and they sought out the range of applicability of each theory.

When I concluded the book, it felt like finishing a long conversation with someone I had come to know and admire. Thinking, Fast and Slow is worthy of a slow and thoughtful read, and I highly recommend it.

Reviewed by Al Erisman

Michael Lewis is the best-selling author of The Big Short, The Blind Side, Liars Poker, A New New Thing, and eight other books.

Many books have been written on the causes of the great economic crisis of 2008, including the author’s own The Big Short. In Boomerang, Lewis looks at the financial crisis in Europe, which represents a part of the ripple effect flowing from the subprime crisis in the U.S. We tend to lump this into the European crisis, but Lewis explains it is a series of quite different crises, where each country had its own unique factors. To develop his story, he spent time in four different countries of Europe, doing research, meeting with leaders, and talking with people on the street trying to understand what went wrong.

The first major part of the book consists of a chapter each on Iceland, Greece, and Ireland. Iceland was plagued by young bankers who knew nothing of adversity, some of them trained in the U.S., some who put their fishing careers aside to become investment bankers. Their insolated, local banks and economy took a position in the world economic system through leveraged investments that dramatically collapsed when the downturn began. They speculated on the world. The Greeks invented math, but didn’t use it. They entered the European Union on the premise of fiscal responsibility that simply did not exist, nor did the culture support moving in that direction. The Irish speculated as well, but it was more internal than it was in Iceland. Buying real estate as if it always went up put their banks in a highly leveraged position and resulted in collapse when real estate values began to drop. Each of these chapters is presented with faces and names demonstrating different types of exuberance and naiveté.

The final two chapters take us to Germany and the U.S. Today, Germany represents the strongest economy in Europe. The impact of the financial crisis did not come from their own fiscal irresponsibility, but rather from a disciplined culture that assumes others also have a disciplined culture. Some of his descriptions are “slap stick” funny. In the U.S., Lewis moves beyond banks, real estate, and other financial institutions to see the impact of the crisis on state and local governments. As Lewis does so well, he takes us to the people of a real city, in this case Vallejo, California, to see how the economic crisis affects fire and police protection, and subsequently, individual lives. There is far less humor here.

Typical of Lewis, his writing is alive with real people, insight, and humor. But this is not a particularly hopeful book. He asks big questions, but is not even sure of the existence of answers to these questions. The subtitle of the book, “Travels in the New Third World” raises fundamental questions about the economic future.

Often Lewis is the master of the overstatement, and that may be the case here as well. But I would recommend the book to anyone who is asking fundamental financial questions.

Reviewed by Al Erisman

Image Credit: Polshek Partnership

I’ve been told that there are 75 museums in Washington D.C., alone. If you have ever traveled to the District of Columba, you know firsthand the dilemma of trying to decide what to see among so many wonderful possibilities. This past summer, Al Erisman and I had the opportunity to visit the Newseum, a fascinating museum covering the world of news and media.

The Newseum is a beautiful 250,000-square-foot museum that covers five centuries of news history through state-of-the-art technology and hands-on exhibits. It opened in its present location in 2008, moving from its previous location in Arlington, Virginia.

Al and I spent about 90 minutes in the Newseum, though you could easily spend an entire afternoon. The Newseum consists of a concourse level and six floors of exhibits. We started our journey on the lower levels and worked our way up. Many of the exhibits change, so be sure to visit the Newseum’s virtual tour for current information. Here are a few highlights from our visit:

Concourse level: Here you encounter eight complete sections of the Berlin Wall, as well as an East German guard tower. Also, on the concourse level is an FBI exhibit that features the Unabomber’s actual backwoods cabin.

Level 1: This is where you eat, check your coat, and visit the Newseum store. The Annenberg Theater is located on this floor, and features a wonderful 3-D film covering the history of news and media. The film is arresting, as is the exhibit next door that showcases a wide array of Pulitzer award-winning photos.

Level 2: Here you will find an interactive newsroom that is fun for kids. I had to pull Al away from playing anchorman. On this level, we also visited the interactive Ethics Center. Based on your answers to news-oriented ethics questions, the exhibit’s kiosks adjust their responses by playing archived video interviews of leading journalists in the field who offer commentary on your particular viewpoint. We found this to be a great way to wrestle with tough questions that don’t always have clear right and wrong answers.

Level 3: This floor covers the history of Internet, TV, and radio news, and tells the story of American journalist, Edward R. Murrow. There is also a poignant memorial honoring the lives of journalists who have died while covering their stories.

Level 4: Here you can step inside Tim Russert’s NBC bureau office, tour a First Amendment exhibit, or visit the 9/11 gallery. You can also watch a film called The President’s Photographer, which offers behind-the-scenes images of what it is like to live and work as the president of the United States.

Level 5: On this floor, there are galleries that cover 500 years of news history, as well as some of the greatest books ever written on political thought and action. The Magna Carta is featured, as are The Federalist Papers. Some of our most iconic newspaper headlines and front pages are also displayed on this floor.

Technology is King at D.C.'s Newseum

Level 6: With a panoramic view of the U.S. Capitol, the National Gallery of Art, the National Archives, and the Washington Monument, this floor plays host to current news and headlines. More than 80 newspapers worldwide are displayed daily, offering a real-time glimpse into our interconnected, yet culturally diverse, world.

If you are in the Metro D.C. area, be sure to pay the Newseum a visit. There is more than enough to interest the entire family. Walking through the exhibits will demonstrate in striking fashion how quickly the world of news media is changing. The experience will also pull on your heart strings as you relive significant days of your own past in which tragedies and triumphs that shaped our world were experienced though the news.

Review by John Terrill
Director, Center for Integrity in Business
Seattle Pacific University

David Brooks is an op-ed columnist for The New York Times, and is the author of two other books.

Amidst a growing volume of books on the brain, based on research both in psychology and brain science, David Brooks has taken a different approach. He builds the story of two people, one (Harold) from an upwardly mobile family, and one (Erica) from a single parent home in an impoverished part of town, and follows their paths from birth through meeting, marriage, careers, and ultimately death. He creates a “high level” story of their lives, and supplements this story with research from psychology and brain science to explain their actions and reactions as they confront issues throughout their lives. Business, career, and personal decisions all get “explained” through how the mind has taken in and responded to the situations it confronts.

A major theme of the book is that most of us think of ourselves as rational people. We wonder about others who don’t see things the way we do. This was the theme of the French Enlightenment. But as Brooks points out, “The British Enlightenment stressed that people are born with a social sense, which plays out beneath the level of awareness,” p. 234. The mind seems to interact with that social sense in a way that looks different from our notion or rationality, and in this sense we are seen as social animals. It is the British Enlightenment that better aligns with modern research on the mind.

There are many gems in the book, and here are two: He explains the short-term focus of our world through research that shows, “… people discount the future as we allow present satisfaction to blot out future prosperity,” p. 178. I loved the subtle self-reference on p. 335. At this point Harold was a policy writer for a think tank in Washington. D.C. “[Harold] spent those years writing his essays, peppering the world with his policy proposals. Not many people seemed to agree with him. There was a New York Times columnist whose views were remarkably similar to his own …”

There is a great deal to like about this book. Anyone familiar with David Brooks, a conservative columnist from an otherwise more liberal newspaper, knows that he is a talented and often witty writer, and this book shows off these capabilities.

When the story, or the explanations, get a bit tedious (and they do in a few places), it is easy to simply skim ahead and pick up the account. I found the storyline on Harold and Erica a bit weak; it was obviously a simple frame through which the author could discuss the research results from psychology and brain science. I also wondered in several places whether Brooks had the qualifications to apply the research in the ways that he did. I feel more comfortable and confident learning about such things from an expert, such as John Medina in Brain Rules.

These reservations aside, this is a delightful read, with a great deal of insight. Business leaders, after reading this book, will never see their staff or their customers the same way again. I recommend it.

Reviewed by Al Erisman

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Idea Man: A Memoir by the Cofounder of Microsoft By Paul Allen, New York: The Penguin Group, 2011.viii, 337 pp.

Paul Allen was the cofounder of Microsoft, a high school friend and colleague of the other cofounder, Bill Gates. He is founder of Vulcan Inc. and the owner of several professional sports teams.

The first 190 pages of this book chronicle the early days when Bill Gates and Paul Allen began to work together while in high school at Lakeside in Seattle, through the ideas for Microsoft and its eventual founding, leading to the time when Paul Allen eventually left Microsoft. This is a remarkable story from Allen’s perspective, identifying key choices that were made in the growth and development of one of the world’s most recognized brands.

This part of the book is insightful on many levels. For those of us who have been in computing since the 1970s, it is a fun trip down memory lane, featuring early computers, timesharing, the emergence of the PC, and the high risk adventure of a startup. Coding all night is a part of the adventure, and if you have done it, you know the exhilaration that comes from getting it done in spite of the odds.

At another level, it is very interesting to see how the story plays out from Allen’s point of view compared with Bill Gates’ version of this story. Allen saw himself as the “idea man” in the partnership. “I was the idea man, the one who’d conceive of things out of whole cloth. Bill listened and challenged me, and then homed in on my best ideas to help make them a reality,” p. 4. Later, he says, “I missed Bill’s laser focus on competition in the marketplace and his ability to execute my ideas and keep me from getting too far ahead of what was doable … I discovered how challenging it was to operate without a pragmatic partner and business maven,” p. 190.

Bill Gates, in The Road Ahead (1995), said, “Paul had lots of answers to things I was curious about … I was more of a math person than Paul, and I understood software better than anyone he knew. We were interactive resources for each other. We asked or answered questions, drew diagrams, or brought each other’s attention to related information. We liked to challenge and test each other,” p. 192.

My reading of the two is that Gates saw the relationship as an exchange between equals, and Allen saw that he was the idea person and Bill carried out his vision in a support role. It’s no wonder the two had a falling out.

Allen made numerous critical comments about Microsoft including its size, slowness, and lack of vision. He concludes that it might have been different if the “idea man” had remained a part of the company, saying “Neither of us have been quite as good alone as we were together,” p. 190. Apparently unknowingly, he has made the case for the disappointing performance of his later businesses that never seemed to make it in the marketplace.

The latter part of the book takes a very different flavor, looking chapter by chapter at his various ventures. Much of it seems hobby oriented, including his adventure travels, his rock music museum, his yacht Octopus (414 feet long with a crew of 50), and a failed cable company Charter. He describes a life of self-absorption apparently still trying to prove he is as good as Bill Gates. He made no comment on the Bill and Melinda Gates Foundation and its outward focus for the benefit of others. I found the second part of the book to be far less interesting than the first.

Paul Allen is an icon in the computing world. His work has made a huge impact, but his story has sad overtones. I felt it was worth the read, but I would not say it is for everyone.

Reviewed by Al Erisman

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Newseum

555 Pennsylvania Avenue, N.W. • Washington, D.C.

Image Credit: Polshek Partnership

I’ve been told that there are 75 museums in Washington D.C., alone. If you have ever traveled to the District of Columba, you know firsthand the dilemma of trying to decide what to see among so many wonderful possibilities. This past summer, Al Erisman and I had the opportunity to visit the Newseum, a fascinating museum covering the world of news and media.

The Newseum is a beautiful 250,000-square-foot museum that covers five centuries of news history through state-of-the-art technology and hands-on exhibits. It opened in its present location in 2008, moving from its previous location in Arlington, Virginia.

Al and I spent about 90 minutes in the Newseum, though you could easily spend an entire afternoon. The Newseum consists of a concourse level and six floors of exhibits. We started our journey on the lower levels and worked our way up. Many of the exhibits change, so be sure to visit the Newseum’s virtual tour for current information. Here are a few highlights from our visit:

Concourse level: Here you encounter eight complete sections of the Berlin Wall, as well as an East German guard tower. Also, on the concourse level is an FBI exhibit that features the Unabomber’s actual backwoods cabin.

Level 1: This is where you eat, check your coat, and visit the Newseum store. The Annenberg Theater is located on this floor, and features a wonderful 3-D film covering the history of news and media. The film is arresting, as is the exhibit next door that showcases a wide array of Pulitzer award-winning photos.

Level 2: Here you will find an interactive newsroom that is fun for kids. I had to pull Al away from playing anchorman. On this level, we also visited the interactive Ethics Center. Based on your answers to news-oriented ethics questions, the exhibit’s kiosks adjust their responses by playing archived video interviews of leading journalists in the field who offer commentary on your particular viewpoint. We found this to be a great way to wrestle with tough questions that don’t always have clear right and wrong answers.

Level 3: This floor covers the history of Internet, TV, and radio news, and tells the story of American journalist, Edward R. Murrow. There is also a poignant memorial honoring the lives of journalists who have died while covering their stories.

Level 4: Here you can step inside Tim Russert’s NBC bureau office, tour a First Amendment exhibit, or visit the 9/11 gallery. You can also watch a film called The President’s Photographer, which offers behind-the-scenes images of what it is like to live and work as the president of the United States.

Level 5: On this floor, there are galleries that cover 500 years of news history, as well as some of the greatest books ever written on political thought and action. The Magna Carta is featured, as are The Federalist Papers. Some of our most iconic newspaper headlines and front pages are also displayed on this floor.

Technology is King at D.C.'s Newseum

Level 6: With a panoramic view of the U.S. Capitol, the National Gallery of Art, the National Archives, and the Washington Monument, this floor plays host to current news and headlines. More than 80 newspapers worldwide are displayed daily, offering a real-time glimpse into our interconnected, yet culturally diverse, world.

If you are in the Metro D.C. area, be sure to pay the Newseum a visit. There is more than enough to interest the entire family. Walking through the exhibits will demonstrate in striking fashion how quickly the world of news media is changing. The experience will also pull on your heart strings as you relive significant days of your own past in which tragedies and triumphs that shaped our world were experienced though the news.

Review by John Terrill
Director, Center for Integrity in Business
Seattle Pacific University

Breaking the Fear Barrier: How Fear Destroys Companies From the Inside Out, and What to Do About It by Tom Rieger. New York: Gallup Press, 2011. 151 pp.

Tom Rieger is the leader and chief architect of Gallup’s worldwide consulting efforts to indentify and remove barriers.

The thesis of this little book is that fear drives much of the destructive behavior in organizations today. It starts with the fear of losing what an individual is entitled to: salary, corner office, perks, etc. This fear causes a person to carry out the “party line,” to violate his or her own values, and to do what it takes to maintain the position that has been achieved. This individual behavior builds into three kinds of organizational behavior.

• Parochialism is first. This is the creation of organizations that are so tied to the rules, so stifling in their structure, that nothing can go wrong, preserving the position of the boss. Of course, there is little creativity here, little innovation. This seemingly gives the boss protection from any disruptive thing that could upset the organization.
• Territorialism is second. This is the organization that puts itself before customers, company objectives, or anything that might interfere with its territory. It’s an organization that doesn’t share resources but hoards them. It creates a “low-grade siege mentality,” focusing more on what nurtures it rather than how the organization can serve.
• Empire building is the third organizational behavior. Rather than simply protecting its own resources, however, the goal of this organization is to grow at the expense of others. What is best for the company, what is best for a customer, is not a part of the thinking.

The three levels can build off of each other, all rooted in fear of loss, and all creating a toxic environment for the organization as a whole.

Rieger then looks at the costs of these behaviors and at strategies for overcoming them. The solutions are not complete, but the questions are all of the right questions.

I picked up this book at the local bookstore almost on a whim. I had never heard of it or of the author. But as I read it, the famous quote of C.S. Lewis came quickly to mind: “We read to know we are not alone.” The author’s arguments fit the reality of so many organizations I have been in. This would be a great book for discussion within a business, university, or nonprofit organization.

I highly recommend it.

Reviewed by Al Erisman

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Drucker’s Lost Art of Management: Peter Drucker’s Timeless Vision for Building Effective Organizations by Joseph A. Maciariello and Karen E. Linkletter. New York: McGraw Hill, 2011. viii, 456 pp.

Joseph Maciariello is the Horton Professor of Management and director of research and academic director, The Drucker Institute, Claremont University. He was a colleague of Peter Drucker for 26 years. Karen Linkletter, a historian, teaches American studies at California State University, Fullerton. She was the first archivist at the Drucker Institute.

Peter Drucker was a management guru. He taught business at Claremont and was an advisor to many companies. He wrote 30 books (which were translated into 50 languages), and numerous articles.

Maciariello and Linkletter went through his writings and drew on their conversations with him to create a picture on his view of the role of management. Is business more than a money-making machine? Is there more to management than meeting or exceeding the numbers? Is there a connection between managing a business and the liberal arts?

The authors found evidence in Drucker’s writings to answer all of these questions positively. In the development, we not only learn about Drucker’s philosophy of management, but we also learn a great deal about who Drucker was and the forces and people who shaped him. The authors paint a clear picture of a man trained in the liberal arts in the devastation of Nazi Germany, and the shaping influences these ideas and events had on his thinking. Drucker became a student of the organization of government, and draws on the tension between federal and local control in application to managing a business. Drucker tended to be private about his religious views, but the authors found that what he said strongly shaped his view of business. His views included the high nature and potential of mankind while also seeing clearly the tendencies for evil. These influences became a fundamental part of how Peter Drucker approached the art of management.

Several of Drucker’s writings hinted at management as a liberal art, but he never developed what he thought this meant. So this became the task of the authors, piecing together the story of what they believe he meant by this phrase.

I give the authors high marks for this thoughtful work. They drew on lots of material to create the case for management as a liberal art. The book is engaging, well illustrated with anecdotes and stories, and makes a powerful point that could transform the way business looks at management. It is worth the time to go through this carefully.

As might be expected from such an expansive work, the writing also raised some questions that might have been better resolved. For example, after discussing the importance of culture and valuing people as a manager, there is a section on management by objectives where Drucker is quoted as saying

“The Responsible Worker is not only a worker who is accountable for specific results, but also who has the authority to do whatever is necessary to produce these results, and who finally is committed to these results as a personal achievement.” p. 172

Unfortunately, it is at this very point that too many managers start to ignore the values and the people in order to achieve the results. Perhaps the authors are arguing that the values need to be incorporated into the specific targets, but it would be good to see some development of how this is done.

Small points aside, this is an excellent book, and I highly recommend it.

Reviewed by Al Erisman

Alleviating Poverty Through Profitable Partnerships: Globalization, Markets, and Economic Well-Being

Patricia Werhane is the widely published chair of business ethics at the Darden Graduate School of Business Administration at the University of Virginia. Werhane and co-authors Kelley and Hartman are colleagues at the Institute for Business and Professional Ethics at DePaul University. Dennis Moberg chairs business ethics at Santa Clara University.
Give a man a fish, and you feed him for a day. Teach a man to fish, and he’ll feed himself for a lifetime. So goes the old parable, but this book brings us into the globalized market economy of the 21st century with a new parable for prosperity — create a profitable business venture by “maximizing the yield of the fish pond and the distribution of the fish by truly forging partnerships with the poor,” and you will reduce, and perhaps even eradicate, poverty forever (p. 17). The central thesis of this book, repeated in every chapter, is that various forms of profitable partnerships between businesses, NGOs, governments and coalitions of the poor “can alleviate poverty by seizing market opportunities” (p. 125).

This is a well-written treatise on the social responsibility of business. The authors succeed in their aim to debunk the false old “caricature of greedy cigar-smoking robber barons helping meek, barefooted beggars” (p. 124). Of course this is an easy target. Perhaps there was a time when that idealized image of businesspeople made sense, but no more. Gone are the days when Milton Friedman’s litany — “the social responsibility of business is to make money” — held sway as a self-evident truth. We now live in a new “complex reality,” which demands us to “change our shared narratives about for-profit ventures and … recalibrate our mindsets regarding how poverty issues are most effectively addressed” (p. 17).

This “changing of narratives” and “recalibration of mindsets” has been Prof. Werhane’s main message for more than two decades. She has parlayed the idea of “moral imagination” into a fruitful stream of business-ethics publications. The basic idea is that we need to be open to new ideas, concepts, and mental maps in order to find innovative solutions to moral dilemmas. In the case of poverty, this means needing to let go of old notions like the “separation thesis” (p. 62), which views business profits and social issues as entirely independent pursuits. That falsehood has created the mistaken impression that charity is the only viable approach to fight poverty. Similarly, we must abandon the outmoded idea that those at the BoP (bottom of the pyramid) are capable only of receiving hand-outs, and see them instead as truly industrious and motivated workers, consumers and providers for their families.

One of the best features of the book is its ample use of personal, “worm’s-eye view” (p. 51) stories to elicit compassion and bring to life a new narrative of abundant hope in profitable partnerships that can alleviate poverty. Each chapter begins with a personal account of a true story that brings the book’s thesis to life. Additionally, many fresh case studies are used to illustrate the business principles, such as Ciudad Saludable, a thriving enterprise founded by micro-entrepreneurs who figured out how to rid the filthy streets of poor barrios in Lima, Peru, of garbage while producing organic fertilizer, creating jobs, and simultaneously earning a profit (pp. 97-98). The stories of personal transformation in these social ventures are inspiring. There is Strive Masiyiawa, for example, the founder of a telecommunications company in Zimbabwe who defied corrupt principalities and took a stand on his religious convictions: “I’m a born-again Christian, and that was a decision I took … [E]very day I must persuade myself that I am practicing my conviction” (p. 94).

One of the most useful insights is that the notion of CSR (corporate social responsibility) is in need of reform if its initiatives are to result in truly effective and sustainable efforts to eradicate poverty. Unless a poverty-fighting project emerge[s] from “the corporation’s raison d’être, it can neither maximize its effectiveness nor be said to be morally good” (p. 69). Businesses come into existence and succeed by virtue of bringing particular gifts of talent and skill to bear on meeting specific needs of specific customers. To neglect or underutilize these gifts, even for the sake of some ostensibly “good” act of philanthropy, would be to miss one’s true identity and fail to live into one’s calling with complete integrity. The authors therefore advocate new terminology — corporate moral responsibility (CMR) — to emphasize the link between a business’s strategy and moral duty, and thereby to avoid the mental trap of the “separation thesis” (pp. 70-73). While the central thesis of the book is ably argued and well supported through practical examples, its ethical reasoning and methodology come off sounding a bit simplistic at times. For example, there is the prescriptive advice to be imaginative and make decisions by “second-guessing possible outcomes” (p. 126). This habit of basing decisions upon the anticipated consequences of “positive and negative effects” (p. 126) runs throughout the book, and reveals a clearly utilitarian approach to ethics.

Those are minor shortcomings, however, in this timely and readable book. It will serve well as an academic text, with a detailed 17-page bibliography, useful index, and numerous practical examples. The new parable of abundant hope in social enterprise is well told, and deserves a wide reading.

Reviewed by Bruce D. Baker, Assistant Professor of Business Ethics, Seattle Pacific University

Bethany McLean is a writer for Vanity Fair, former writer for Fortune, and coauthor of The Smartest Guys in the Room, an analysis of what went wrong with Enron. Joe Nocera is a business columnist for The New York Times, former editor with Fortune, and a finalist for the Pulitzer Prize in 2006.

The goal of this book is to lay out the case for what went wrong in the worldwide financial crisis that began in 2007 but actually had its roots more than 30 years earlier. Step by step, the authors show how diverse and seemingly independent players (banks, mortgage lenders, appraisers, congress, regulators) each contributed a piece to the complex disaster that had its impact from Wall Street to Main Street to the world. Most importantly, the authors show how the pieces fit together — the independent players were not independent. Complexity played a part, but so did good old fashioned greed. This is a fascinating and ugly picture.

The book is filled with anecdotes and quotes gathered by the authors, making the book come alive with real people and real emotions. It is not just about structured investment vehicles, Wall Street transactions, and fraud. Under the authors’ well written prose, the story is made understandable with biases, ideologies, and backgrounds of the various players. After reading this book, it will be difficult to offer simplistic explanations based on just a small subset of the factors.

I have a couple of minor criticisms. The chapter titles are “cute” but not helpful when using the book as a reference. The content picks up one strand or another (bankers, regulators, etc.) but this is not obvious from the titles (“The Carnival Barker,” “The Wrap,” etc.). The “Hidden History” claim in the title is a bit misleading as well. Most of the pieces have been widely discussed, but it is the integration that makes the book.

I had hesitated to read the book only because I have read eight to 10 other books on the subject, and felt I understood the picture pretty well going in. In fact, in the first half of the book, I felt like I had read it all before. However, the last half of the book helps put the pieces together in a way that many of the other books had not, and I believe this is worth reading even for those who know quite a bit about the subject.

For those who have only listened to sound bites on CNN or Fox News, this is a must read.

Reviewed by Al Erisman

Enchantment: The Art of Changing Hearts, Minds, and Actions

Guy Kawasaki is a founding partner of Garage Technology Ventures, co-founder of Alltop.com, and the former Apple evangelist. This is his 10th book.

The fundamentals of business — great products, strategy, marketing, and financial acumen — are indeed important, but they are not enough to make a great business. The magic ingredient is “enchantment,” according to Kawasaki. Enchantment affects employees, customers, investors, and everyone who comes in contact with the business. It marks the business with that “something special” that distinguishes it from the competition. He puts it this way in the opening chapter:

“The world will not beat a path to your door for an insanely great mousetrap. In fact, the greater the mousetrap, the more difficult it is to get people to embrace it because it is so different from what people are used to.”

He then builds the case chapter by chapter in a style that only Kawasaki can pull off. For anyone else, saying the things he says might be considered flippant or self-centered. But when he says them, they are insightful, profound, and genuinely fun.

He discusses attracting capital to your business through enchanting presentations (never more than 10 slides, never less than 30-point font). He talks about “meet and greet” including the proper handshake, appropriate dress, and even the appropriate use of swearing.

He is very focused on empowering others, particularly service people dealing with customers. “They care a lot,” he says. Then he adds,

“Money is not their sole motivation. The satisfaction of taking care of customers and making them happy is important, too. The bummer is that organizations don’t let their employees do this. Unwittingly, they prevent employees from doing their best for the customers with policies that are written to prevent losses, not achieve gains,” p. 153.

Enchantment is also applied to relationships with the boss, employees, customers, and potential customers.

This is a terrific, enjoyable, and important book. It would be great for the entrepreneur. It would also be helpful to almost anyone in business. And those in nonbusiness organizations would find enough applicable chapters to make this worth the purchase price. I highly recommend this book.

Reviewed by Al Erisman

Safe Patients, Smart Hospitals: How One Doctor’s Checklist Can Help Us Change Health Care from the Inside Out by Peter Pronovost and Eric Vohr. New York: Hudson Street Press, 2010. xxii, 282 pp.

Peter Pronovost is a professor at the Johns Hopkins School of Medicine in the departments of Anesthesiology, Critical Care Medicine, and Surgery, Health Policy, and Management. He was named on of Time Magazine’s “100 most influential people” in 2008, and received the MacArthur “genius grant” in 2009. Eric Vohr teaches technical writing at Johns Hopkins University, and has been a contributor to many magazines.

Pronovost was inspired by the tragic death of a child under the care of physicians at Johns Hopkins Hospital. “What really killed Josie was an archaic culture that disabled the care team so they did not recognize and act on the obvious signs that Josie was dehydrated,” p. xx. Drawn into the issue through conversations with the child’s mother, Pronovost began a relentless pursuit of the causes of hospital safety problems and the need to identify new approaches.

This book is his story of a process that started in one part of the hospital (dealing with reducing infections from post-operative surgery) and then spread to many other areas of the hospital. It started at Johns Hopkins and then spread to hospital systems across the state of Michigan. It began with that first talk and has spread to congressional testimony and a campaign across the country and around the world.

The book is simultaneously inspiring about what could be done, and a bit frightening as to what is so often done instead. It shows what the determined, focused efforts of an individual can do to make a difference that is literally life or death.

I admit to having some reservations about the book as well. This is not the first book I have read on the subject of hospital safety. Other work by Atul Gawande, Bob Wachter, and Gary Kaplan, for example, offers complementary insight, which taken together, could start a revolution. These doctors and authors make reference to Provonovost’s work, and Gawande even endorsed this book. Yet Pronovost did not mention any other work of these hospital safety leaders, as if he were the lone pioneer. Gawande’s presentation of the checklist case is clearer, in my view, showing the trial-and-error process of getting the checklist right. In a similar way, Pronovost offers little insight on how to approach the hospital safety problem, seemingly reacting to particular issues rather than identifying a step-by-step process for addressing the many issues that are a part of the hospital safety problem.

Had this been my first book on the subject, these criticisms would not have been so obvious. But as one colleague said, perhaps the criticisms are simply a reflection of the early stages of this movement. As it gains more maturity, it will become more integrated with its many contributors. Nothing said here should detract from the good work that Pronovost has done.

This book offers significant insight and inspiration. Those in health care will benefit greatly from it, as will those needing health care! And those in other business areas could also gain insight for their own work.

Reviewed by Al Erisman

“The Cost Conundrum: What a Texas town can teach us about health care” by Atul Gawande. The New Yorker, June 1, 2009.

A surgeon and a writer, Atul Gawande is a staff member of Brigham and Women’s Hospital, the Dana Farber Cancer Institute (both in Boston), and The New Yorker magazine.

McAllen, Texas, is in Hidalgo County, which had the lowest household income in the country in 2006. But this is not what attracted Gawande’s attention. Rather, it also had the second highest per capita health care expenditure. In 2006, Medicare spent $15,000 per enrollee in McAllen, while the average income per person was $12,000. This compares with Grand Junction, Colorado, where the average expenditure per Medicare enrollee was about $5,000, as well as El Paso, Texas, where lifestyles were similar but health care costs were much less. Only Miami, Florida, had a higher expenditure, and it is much more wealthy. Gawande wanted to know what was going on, and this article reads like a detective story as he searches for answers.

The doctors in McAllen assumed that they were offering better treatment, but the outcomes did not bear this out. Gawande looked for environmental factors — higher levels of smoking or obesity in McAllen than in other places. Again, a dead end. If anything, the smoking rates were lower in McAllen than in El Paso or Grand Junction, leading to a lower incidence of cardiovascular disease.

Ultimately, Gawande found the distinguishing feature in McAllen’s health care was their economic approach to health care. Doctors in McAllen were on the “extreme end” of the spectrum where financial decisions drove the mixture of the care and the practice of care.

I highly recommend this article. It is readable, thoughtful, and explores surprising aspects of the health care challenge. It was undoubtedly a factor in the 2010 health care legislation.

Reviewed by Al Erisman

Charles Kenney is the author of 10 books with a recent focus on health care. He is a former reporter with The Boston Globe and the Boston CBS television affiliate.

The Virginia Mason Hospital in Seattle was struggling in 1998, having lost money for the first time in its history (going back to 1920). The concern was not financial, however, but there was also an issue with quality care and this troubled the leaders for the hospital even more. When Gary Kaplan became CEO in 2000, they took on a new initiative to improve both, seeking to become a patient-centered medical institution, and to develop effective and reliable systems following the model of the Toyota Production System. It may seem a bit of a stretch to think that a hospital could be run on the principles of a manufacturing company, and it did, in fact, require significant adaptation to make this work.

This book tells the story of the steps of transformation for Virginia Mason from the first idea in 2000, to the trips to Japan to observe and be trained in lean manufacturing principles, to today’s practice. It chronicles the effort through the positive steps of reduced costs and increased quality. It does not skip past the failures along the way including a woman who died from a hospital error, but openly discusses the case and the lessons from it. It works through the challenges of change management, when many leaders in the hospital thought the team was on the wrong track and some key doctors left the hospital.

At this point, Virginia Mason has opened its first facility with no waiting rooms (waiting rooms represent waste since nothing productive happens there), had created standard procedures for many of its practices, and has been recently identified by The Leapfrog Group as one of two hospitals of the decade for its high quality and low costs. The book ends with the discussion about the future journey, since the path to higher quality health care at lower costs simply does not end.

This is an outstanding book on many levels. It provides great information about a surprising journey to transform health care. The book includes personalities and stories, which makes it meaningful and personal. And while it is focused on health care, it would be valuable reading for those in other industries. I could see others applying the ideas of this book to education, retail clothing, a consulting business, or a software business. It can also be viewed as a primer on change management: How do you introduce radical change to an organization and bring others along?

My only quibbles with the book are its price (almost $40), which will keep some people away, and its health care focus, which will make it seem irrelevant for other types of businesses.

This is both a great story and a great teaching tool for leadership. I highly recommend this book.

Reviewed by Al Erisman

After the Fall: Saving Capitalism From Wall Street and Washington by Nicole Gelinas. New York: Encounter Books, 2009. xi, 227 pp.

Nicole Gelinas is a chartered financial analyst, a Manhattan Institute senior fellow, a member of the New York Society of Securities Analysts, and a contributing editor to City Journal. She has a B.A. in English literature.

After the Fall does an analysis of what happened in the economic crisis of 2008. Her analysis starts in the 1920s, looking at the factors that led up to the Great Depression. After Wall Street fell in 1929, the government instituted a series of policies aimed at protecting speculators — and others they would drag down with them — from themselves. No longer could they borrow all of the money to buy stocks, assuming they would always go up. By the time Wall Street fell, “investors” were leveraged many times over. Community banks, who had joined the speculation binge, were separated from the investment banks, assuring that speculation could be isolated and contained. The goal was not to keep banks, or other companies, from failing. Rather, it was to allow them to fail if they managed poorly, without taking down the whole financial system with them.

“Depression-era regulations, because they encouraged free markets rather than smothered them, served the country well for more than half a century,” she writes.

But in 1984, when Continental Bank in Illinois became distressed, the government rushed in to save the bank, preventing the banking system from collapsing. “The era of ‘too big to fail’ thus began.” she argues. Encouraged by the implicit promise of government support, banks began to ratchet up their irresponsible behavior. “The trend of breaking down the Depression-era separation of banking and securities businesses only accelerated,” Gelinas writes. By 1999, when Glass-Steagle (the law that separated the roles of banking from securities) had formally been repealed, it was only a formality. Many of the key pieces had already been compromised. Banks had won concessions from the government because they couldn’t compete for talent or customers with the more “high flying” securities houses. And this new banking industry demonstrated the maxim that speculators like to bet with somebody else’s money more than with their own.

The parallels to the current economic crisis are clear. People were buying homes like they used to buy stocks back in the 1920s: no money down, a good bet since home prices will always go up. And the moral hazard initiated by the government in rescuing Continental Bank simply enabled these bankers to speculate and leverage even more, knowing there was no downside risk.

Gelinas key message is that capitalism needs clear rules in order to flourish, and that must include allowing bad businesses to fail. Bail outs only encourage further bad behavior, and what we have seen in the recent financial meltdown is simply a lesson forgotten from what happened in the 1920s and ’30s.

She suggests a small bit of self doubt near the end: “If the nation thinks that it has no choice but to protect lenders to financial firms from market forces, it should treat the industry as an arm of the government … But surely, before Washington permanently nationalizes finance, so important to the economy, it at least should try the other approach first.”

This bit of self doubt about her own very logical argument may be rooted in two big weaknesses in the book. The first is how to deal with a crisis. Given the situation in 2007-08, what should be done now? It makes no more sense to talk about policy and government rules at this point, than it does to lecture a heart attack victim in the emergency room on the need for better exercise and diet. There will be a time for that, but not now. Further, we don’t have the luxury of experiment here. Letting some of these banks fail just to see what happens can’t be “done over” if it doesn’t work.

The second weakness may be more important. She seems to operate from the assumption that the government can set up a perfect set of rules and then businesses can safely operate to the margins of the law, failing if they go too far and succeeding if they get by. In this age of technology and complexity, it would seem that this is a recipe for disaster. There is no way to anticipate all of the “innovations” people may try in the name of profit maximization. There remains the importance of moral leadership, a subject she doesn’t mention.

This book is worth reading. Its elegant argument is well crafted and draws deeply on history. But I believe in spite of this, the book has a fatal flaw.

Reviewed by Al Erisman