Book Reviews

Central Banking in Theory and Practice, Alan S. Blinder, MIT Press: Cambridge: MA, 1998.

Economic Puppetmasters, Lawrence B. Lindsey, The AEI Press: Washington, D.C., 1999.

By the time you are reading this, the fall election will be in full swing, and a certain nausea with political ads has likely set in. To bring some gravitas to the election decision, I thought I would search for books that would shed light on the economic policies of the two major candidates. We should be more successful businesspeople - and citizens - if we can make our own assessments of global leaders' economic policies than relying upon what passes for economic analysis on the evening newscasts.

The key economic advisors for Bush and Gore are Lawrence Lindsey and Alan Blinder, respectively, and their views will help set the economic direction for the next four years. Both men are former governors on the Federal Reserve, and in today's global economy, the role of central banks is increasingly critical. While the two do appear occasionally on business and political talk shows, I was hoping to find books that would outline their views. I was moderately successful.

While Lindsey has a book, Economic Puppetmasters, that is informative and interesting reading, Blinder's publications for the general audience aren't quite as approachable. He does have an economics textbook that some of you may have studied - I was weaned on Paul Samuelson's text - but, other than policy speeches, his only other recent publication is Central Banking in Theory and Practice. I'll turn to Blinder's book first.

Central Banking in Theory and Practice is a series of three lectures given at Cambridge University. At first, I thought I had found a book that would easily explain his economic thinking, "I have… two different audiences in mind: on the one hand, teachers and students in universities and, on the other, real-world practitioners of the art of central banking." It seems that Blinder meant, "advanced students." By page three he drops into the shortcomings of structural equation models of the macroeconomy based upon the theories of Tinbergen and Theil. "All very simple." Perhaps, but my last formal course in macroeconomic theory is two decades ago, and the economic calculus certainly brought back memories mercifully forgotten.

But was Blinder' purpose in the mathematical discussion to drive the less serious students out of the lecture hall - or put any journalists to sleep? So it seems. He quickly brings the discussion of the shortcomings of the formal model down a level. Don't let pages 3-4 be off-putting. Rewards will come with diligence.

The heart of the Blinder's argument in the first lecture is that central banks must develop monetary policy to address the short-term economic issues but only as part of a long-term strategy. Central banks should take one step at a time, make that step a conservative one, be thinking of the next steps, but be flexible in their willingness to change those next steps if new data suggest the original policy is now inappropriate. His second lecture argues that central banks should use manipulation of the interest rate rather than the money supply as the means to steer the economy. He grounds these arguments in economic theory, but the logic of his arguments is clear.

His final lecture defends the independent role of central banks. The nature of the central bank's independence should lie in the instruments it uses, not in the goals to be achieved. Those goals should be set by elected representatives and be long-term goals, not short-term ones. Monetary policy takes time for its effects to be felt, and if an elected administration were to set monetary policy, it would be unlikely to seek higher unemployment to fight an inflationary trend - especially in the approach to an election year. A central bank must be free to achieve its stipulated goals without fear that other branches of government will seek to reverse or negate the policy through its own actions. Further, central bankers need credibility for their policy moves to achieve their desired ends, and a central bank tied too closely to the political objectives of a government in power would lose that credibility. Thus, the impact of the policy moves, which in part depends upon the interpretation of those moves, would be compromised.

Blinder's lectures give an insight to the relationship of the central bank to other governmental institutions, but the book sheds little light upon the type of fiscal policy that Blinder would advocate in a Gore administration.

Economic Puppetmasters does indicate the policies that may come from a Bush presidency, but it goes beyond that. Lindsey used the connections he developed during his tenure at the Federal Reserve Board to gain an audience with four key figures in the world economy, Alan Greenspan, chairman of the US Federal Reserve Board, Eisuke Sakakibara, vice ministry of finance in Japan, Helmut Kohl, former chancellor of Germany, and George Soros, a well-known financier. These are, to use Lindsey's phasing, the Contrarian, the Mandarin, and the Historian, respectively. He assigned no moniker to Soros, who is not a puppetmaster, but instead keeps the puppetmasters honest. Lindsey states that the book is geared towards three types of readers: the modern investor, the student of political economy, and the informed voter. This may seem an odd mixture of audiences, but we all should fit into two of those three categories.

The book provides the background for understanding the global financial crises of the 1990s. What is it about our institutional arrangements that led to such calamities? The hope is that by understanding the shortcomings we can make the necessary institutional changes, rather than simply assigning a scapegoat, as Herbert Hoover was for the Depression. Lindsey shows a disturbing parallel between the moves of central bankers in the late 1920s and the late 1990s. Effecting those changes requires that the populace understand the problems and demand that our politicians truly address them instead of playing politics. Having just witnessed - and felt financially - one of the greatest asset bubbles in financial history, Puppetmasters is rather prescient. Lindsey describes how the actions of central banks in propping up the worldwide economy were creating conditions ripe for absurd valuations in equity and other asset markets.

Why "puppetmasters"? Lindsey argues that the role of the key economic decision-makers in the three greatest world economies is determined by historical contingencies. That is, what they can do and what they choose to do is determined by history of the three societies, not just their economies, over the past century. Lindsey's book helps us understand the historical forces that created the institutions that direct - and will direct - the global economy.

"The key point is that decision-makers may never be the masters of the systems over which they hold sway, no matter how much they delude themselves and the public believing they are. More typically, they are the system's servants… That is what makes the process of scapegoating so enticing for a society [when economic calamity happens]. It presumes that the scapegoat was really the master of the system in the first place. The system is not safe because a new `master' is allowed to take his place without any fundamental reforms occurring." Scapegoating is really a means for the institutional system to protect itself.

So, who are these puppetmasters? Greenspan is the contrarian because a democratic mixed economy requires a contrarian to head its central bank - as Blinder's book describes. "Alan Greenspan is successful at his job because he found a way of taking unpopular actions without arousing sufficient wrath to cause elected officials to curtail his power." The mandarin, Sakakibara, as an educated bureaucrat is the product of centuries of socio-political forces in Japan. Macarthur enshrined this bureaucratic governance model in the new constitution in 1945. "Kohl the historian was a preeminent builder of political coalitions, but, in practice, the coalitions that he built were often coalitions of `princes,' not of people, because that is what history demands." Germany's history of aggression and post-war hyperinflation has led Kohl to direct Germany towards integration with Western Europe while seeking integration of the two post-war Germanies.

Lindsey paints a cautionary picture of the global economic future, and he is not sanguine about the potential for true systemic change, mostly due to the political calculus of the day. We in the US reward politicians for showing they share the concerns of the everyday person, and thus politicians focus on small improvements that are symbolic rather than substantial. Tackling institutional change in global financial systems will win few votes, especially in a time of prosperity when it appears that the systems are working just fine - just as we felt in the 1920s.

Puppetmasters, though, is not dry economics; in fact, this is lucid reading. As he describes his visits with the puppetmasters, Lindsey brings us into their world, painting a picture of the cultures and societies that have bred three very different approaches to the management of an economy. We may marvel at Alan Greenspan's success, but how many of us know what his office looks like and what a "day in the life" is for Greenspan?

While the premise of the book is to describe the views of the troika of policymakers, Lindsey uses his pulpit to present his views on economic policy, which are decidedly geared towards allowing the market mechanism of Schumpterian "creative destruction" to take its course. As opposed to Blinder's lectures, which were very targeted towards the role of the central bank, Lindsey uses his book to present an argument for an equal role for supply-side analysis along with Keynesian demand-side analysis in discussions of macroeconomic policy. He achieves this through a very readable presentation of basic economic theory - with no equations. If you're economics is rusty or even if you have no background in economics, Puppetmasters will prove enlightening.

Generations at Work: Managing the Clash of Veterans, Boomers, Xers, and Nexters in Your Workplace, Ron Zemke, Claire Raines, and Bob Filipczak, Amacon, 2000.

I need your help reviewing this book. Keep reading and you'll understand why.

Generations at Work is an important tool for managers who are coping with issues that arise from having multiple generations working together - or against each other - in companies. "The mix of race, gender, diversity, and the tension and challenge, opportunity, and promise it presents are the focus of this book… It is a rift that will not heal itself or just go away… [The generational] differences can be a source of creative strength and a source of opportunity, or a source of stifling stress and unrelenting conflict. Understanding generational differences is critical to making them work for the organization and not against it. It is critical to creating harmony, mutual respect, and joint effort where today there is suspicion, mistrust, and isolation." Generation gaps have always existed, but "what is new and different is that the new generational gap is tripartite and soon to be become a four-way divide."

As a start to generate the needed understanding, the authors devote a chapter to each of the four generations we find in or near the workforce in the US:

The Veterans - the 52 million people born from 1922-1943 whose life views were shaped by World War II and whose core values have dominated our culture for decades, providing the benchmark for others' belief systems.

The Baby Boomers - the 73 million people born from 1943-1960, who were reared on optimism and progress, have a love/hate relationship with authority, and live to work.

Generation Xers - the 70 million people born from 1960-1980, "who came of age deep in the shadow of the Boomers" and have a "need for feedback and flexibility, coupled with [a] hatred of close supervision… They work to live, not live to work."

Nexters - the 70 million people born from 1980-2000, who have grown up with high-tech in their blood, admire the Veterans, and are hopeful for their future.

Each chapter is enjoyable reading - certainly not the typical dry, business book. The authors describe each generations' personality, work ethic, ability to work in teams, leadership style, and how they should be recruited, managed, motivated, and mentored. The narrative is supplemented with engaging side-bars that illustrate each generation's core values, seminal events that shaped the generation, cultural memorabilia, heroes, differences from other generations, what other generations say about this one, and the fact & fiction of the generation. In fact, you can get the gist of the chapters just from reading the sidebars.

Following the descriptions of the generations, the authors turn their attention to suggestions on how to improve workplace interaction. First, they lay out their ACORN Imperatives for a cross-generational friendly work environment:

Accommodate employee differences

Create workplace choices

Operate from a sophisticated management style

Respect competence and initiative

Nourish retention

They then give five examples of success stories from food service to high tech: Chevy's Fresh Mex, TGI Fridays, Ben & Jerry's Homemade, West Group, and Lucent Technologies. Next, we learn about the "plight of Charlie Roth," who is confronting difficulties in managing a diverse workplace. The case is laid out for you to analyze, then "answers" are provided by a number of experts in the field. The book concludes with 21 frequently asked questions - and their answers - and a self-diagnostic questionnaire for you to analyze where your organization lies in the spectrum of intergenerational conflict. There are many practical answers to be found for real-world problems.

One real limitation of Generations is that its relevance is limited to those from the United States. There is no attempt at an international comparison or discussion. My greatest issue, though, with the book is that the authors say little about their research. The introduction devotes one paragraph, "A Few Words About Our Research," but that didn't convince me of the validity of their findings. They do provide citations, but all but a small handful of the periodicals referenced are from the popular press. They heavily cite a few research studies, and while work by the Harris organization has established credibility, a survey done on www.kidpeace.org's web page does not. This is a field in which much rigorous research is being performed, and their work would have carried more weight with me if they had incorporated that work, making it accessible to the lay person. The authors may be right in their assertions, but I would like more certainty of their methods before invoking their ideas.

And here's why I, as the reviewer, need help. I'm a Boomer, born near to the demographic dead center of my generation, and as I read the chapter that described me, I nodded in agreement. As a Boomer, though, I'm in no position to judge the accuracy of the descriptions of the other generations. If you're a Veteran or Gen-Xer and find yourself at odds with their description, let me know.

Butterfly Economics: A New General Theory of Social and Economic Behavior, Paul Omerod, January 2000, Pantheon Books.

We've all flown in airplanes and looked down upon a city to see humans moving around like ants. Paul Omerod, in Butterfly Economics says there's more truth in that analogy that we first might think. Traditional economic theory focuses on the behavior of the individual, applying a critical assumption: each individual acts independently of all others. Omerod, a British economist who writes for The Economist, asserts that humans act more like ants, drawing upon the following experiment with ants.

Two piles of food were placed equal distances from an ant colony. Each pile was constantly replenished by the experimenter so that the piles were always identical. What behavior do you think the ants would follow? Most of us would think that any given ant would return to the same pile since it's a known food source, communicating that information to his fellow worker ants, and that on some random basis one pile would be favored. In fact, the proportion visiting each pile fluctuated over time.

How could this happen? An individual ant can 1) follow its previous behavior, 2) be influenced by others through the scent trails to change its behavior, 3) change its behavior on its own. The result of the ant experiment shows that some individual ants changed their behavior in unpredictable ways.

Classical economics assumes that individuals act in isolation in determining what their "utilities" are. Individuals gather information and then make a rational decision. Yet, Omerod argues we are clearly influenced by others. Look at how stock buying decisions are made, or how each Christmas some toy become the craze. The behavior of others influences decisions beyond what would appear rational. Here's where conventional economics with its premise of competitive equilibrium finds it flaw. Individuals don't act in isolation, and marketing might actually matter. "Human society is much more like a living organism - a living creature, whose behaviour can only be understood by looking at the complex interactions of its individual parts. It is this concept and its implications which form the underlying theme of Butterfly Economics."

But what do ants have to do with butterflies? Much of the book applies the concept of chaos theory, which argues that events are interconnected and unpredictable. A butterfly flapping its wings in Maine could cause the rain in Spain to fall mainly on the plain. A small event can have big consequences and large events may have trivial consequences. Perhaps what is most important to the end result is the starting point of the "system," but the events appear very random and are exceedingly difficult to forecast. "Unpredictability is an inherent part of the processes which underlie a very wide range of economic and social phenomena."

Omerod takes this basic argument and applies it to wide-ranging fields, from voting patterns and disease communication, to the propensity for crime and marriage. From a public policy standpoint, Omerod argues that politicians are wrong to try to micro-manage the economy. Economic "systems are inherently extremely difficult to predict and control. This is not merely a point of intellectual interest, but of great practical import. For it implies that much of the control which governments believe they exercise over the economy and society is illusory." The randomness of events makes attempts at control a fool's errand - with our money! Instead, government should set the "overall structural framework" for a sound societal and economic system.

Butterfly Economics challenges the idea that economics must be a dismal science, but the writing may not grab and intrigue the lay person. I've had more than my share of economics course, and had I not been reading the book while the prisoner of Seat 23D on a transcontinental flight, I may well have wandered to other activities. Omerod repeats much ground in the book - seemingly like the ants and their food piles - as if the chapters were written independently and not totally integrated. In fairness, I did find myself applying the lessons of the book to the Justice Department's handling of the Microsoft case, so the book did stimulate my thoughts. Perhaps like ants, I've influenced you to read Butterfly Economics.

The New New Thing: A Silicon Valley Story, Michael Lewis, NY: W.W. Norton Company, 2000.

You've probably not heard of myCFO and you may not have heard of Healtheon/Web MD. But Netscape is certainly a household word, and Silicon Graphics is well known in the business world. These companies are all the creation of a fervid, fertile mind, the mind of Jim Clark. Clark has recently written a book, Netscape Time: The Making of the Billion-Dollar Start-Up that Took on Microsoft - or, rather, had it written for him - about his business life. The picture on the cover of that book makes him look a rather normal, 50ish business executive, not at all the image one gets from reading Michael Lewis' The New New Thing.

Paul Romer, the University of Chicago economist, theorizes that economic growth is not having more of the same things. Rather, wealth creation comes from applying our imagination to creating new things. The wealth creators are the chefs who devise new recipes for ingredients. Lewis sought to understand the chefs of the Silicon Valley who have so changed the business - and social - fabric of the US in the past decade.

To accomplish this, Lewis sought out one of the driving forces of the Valley, Jim Clark, and hitched himself to Clark's tempestuous wagon for a year, chronicling the creation of Heatheon, and writing a partial history of Netscape and Silicon Graphics, both of which Clark founded. Clark's life is an adventure story; he has no idea where he is headed except for adventure. "You didn't interact with him so much as hitch a ride on the back of his life."

Writing this book took Lewis to a Dutch shipyard where Clark's yacht, with a 197 foot masthead and 21 Silicon Graphics computers, was being built. The writer Gene Shephard has described a yacht as "a boat that don't do nothin." The Hyperion was a yacht where even the sailors weren't supposed to do nothin. Clark wanted a yacht that he could sail by remote control. The computers would run everything. And Lewis got to ride the Hyperion on its maiden voyage across the Atlantic with Clark, who was bored silly by the tedium of the crossing. The fun for Clark was in creation, not sitting on a deck looking for Orion's belt for the umpteenth time. But the desire to build Hyperion drove Clark to create Healtheon to finance the yacht building. So goes the strange driving forces of innovation in "ClarkWorld."

The New New Thing is not a business text with new theories and takeaway lessons. Rather, it is biographical, and as with a good biography we learn the impact of a person upon society. And Clark is a most unusual person. Most of us pursue our business lives trying to become players in our field. Clark defines his field. But he doesn't do this following some grand plan or thoughtful, reasoned steps. "Clark did not conceptualize his new role: he groped for it… That is how his mind worked - the logic always came after the initial, inexplicable, primal impulse."

Clark doesn't sport the alleged paranoia of an Andy Groves of Intel. Nor does he want to manage a large company, becoming a "Serious American Executive." Instead, he was always searching for the next challenge. "The one hard rule in Jim Clark's life was that he must always pursue the new new thing." Clark "wanted to create the company that invented the future." But beyond invention and creation, Clark also wanted to change the power relationships in the new economy - as we now call it.

At Silicon Graphics, Clark the creator was third in line for the benefits of his creation, after the venture capitalist, Glenn Mueller of the Mayfield Fund, who financed the venture, and after the Serious American Executive, Ed McCracken, who was brought in as CEO to run the company as Serious Companies are supposed to be run. The engineers who put Clark's concepts into practice were left out of the picture. "Clark was intent on inventing a new role for himself that would not allow the Muellers and McCrackens to take advantage of him" Clark learned how to work the hype machine. With Netscape, Clark dictated the terms rather than be dictated to. He would come away as the primary owner with the engineers richly rewarded with stock ownership. Clark dared the venture capitalists to not come along on his ride. "He was the guy who always won the game of chicken because his opponents suspected he might actually enjoy a head-on collision."

Personally, I would find working for Clark very taxing. The concepts of process and planning are anathema to him. He never goes through the exercise of writing a plan. Planning wastes too much time in his world. But the promise of a fortune lures people to follow him to each new venture like a pied piper.

Lewis' picture of Clark is very colorful, and with a character like Clark, Lewis was working with a palette full of brash colors. The author's prose is vivid and very engrossing. If you're looking for an easy reading book, perhaps for summer vacation, that will still be thought provoking, consider The New New Thing. If you do read it, that will likely set you apart from Clark. Clark, a man who has a tunnel vision for looking only towards the future, is unlikely to read a book about his past.

The Lexus and the Olive Tree, Thomas L. Friedman, NY: Farrar, Straus, and Giroux, 1999

I first learned of The Lexus and the Olive Tree at a conference last Fall. I knew of the author, Thomas Friedman, through various new shows, such as Washington Week in Review. The title alone intrigued me, and my colleague at the conference spoke highly of Friedman's presentation of an apparently non-sequetorial title. What could a Lexus and an Olive Tree have in common - or why would the contrast be of interest?

The answer, in Friedman's thesis, is that they represent the two forces that are at odds in the world today. The Lexus represents the market-driven forces of the world economy and the desire to satisfy material wants and needs. The Olive Tree, an image from the Middle East, represents what roots us, that is, the need for cultural identity, tradition, and community. These two forces are frequently at odds with one another and their contention can lead to problems, particularly for those countries that cling to their olive trees.

Friedman is the foreign-affairs correspondent for the New York Times, and in that capacity he has traveled the world many times over meeting with world leaders and the everyday person from main streets to jungle huts, including jungle huts that engage in ecommerce. He has an insatiable sense of curiosity that has led him to ferret out the unusual and look for explanations. This book is his attempt at explaining many odd phenomena that he has encountered in his travels that describe the new world order.

This is a book on globalization, a force that has changed so much in our daily lives and the workings of nation-states. For forty years the organizing principle of the world was the Cold War. There were two armed camps who learned how to live peaceably with one another. There was a structure to the world, a set of rules that described the interaction between the armed camps, technologies (nuclear missiles) that defined the world, and a means of measurement (throw weight of missiles). With the Cold War over we have entered a new system, one of integration, of globalization. The structure and rules are now market oriented with nation states of diminishing relevance. The defining technology is no longer the caliber of a missile but the bandwidth and speed of the network. "The symbol of the Cold War was [the Berlin Wall], which divided everyone. The symbol of the globalization system is a World Wide Web, which unites everyone."

Friedman argues that there are three democratizations that have changed the world: the democratization of finance, the democratization of information, and the democratization of decision making. These forces have spurred the creation of the Electronic Herd, a term Friedman coined to describe the mass of financiers and the like who really drive nations today. A visit from the Moody's representative who will change a nation's bond ratings is perhaps more important than a visit from the US Secretary of State. World leaders are more like US state governors who court the Electronic Herd.

The fundamental challenge Friedman describes is for nations or cultures to maintain their identity and individuality in the face of the collectivization of decision-making in the Electronic Herd. As we saw in Seattle at the WTO conference last year, there are many in the United States, not to mention the rest of the world, who are greatly troubled by the homogenizing forces of globalization, and the apparent transfer of power from the ballot box to the corporate boardroom - and stockholder votes. This is a fine line to tread. Nations that have tried to resist the Herd by erecting barriers to protect their olive trees have been trampled by have been "sold" or trampled by the Herd. These nations prosperity improvement will lag those of other nations, also leading to potential unrest.

While the book runs almost 400 pages, Friedman, as an accomplished writer maintains the reader's attention with his stories and off-the-wall theories. His is a quirky sense of observation. For example, the strength of an economy is inversely related to the physical weight of its exports, something Friedman first heard from Alan Greenspan. He makes uses of many cute phrases to explain his thesis, such as Electronic Herd, which have Short Horn and Long Horn varieties. Some readers may find these phrases a tad too cute. As for theories, were you aware that no two countries with McDonald's franchises have ever waged war? This he calls "The Golden Arches Theory of Conflict Prevention," which he uses as a metaphor for the economic integration of nations that makes the cost of warfare too high to consider. In this discussion of the merits of McDonald's burgers you will also find passages from Montesquieu and Thucydides. Friedman is not an intellectual lightweight, but his writing is very approachable.

As our companies are increasingly engaging in international commerce, an understanding of the forces that are defining the world order will be critical. Friedman's book may not the answers, and you can certainly dispute some of his observations, but his ideas should provoke some thoughtful moments. It is interesting and entertaining reading.

The New Pioneers: Men and Women Who Are Transforming the Workplace and Marketplace, Thomas Petzinger, Jr., NY: Simon and Schuster, 1999.

As a reader of the Wall Street Journal, I became familiar with the author of The New Pioneers, Tom Petzinger, many years ago. Friday's Journal was my favorite for it contained Petzinger's column, "The Front Lines" on the front page of the Marketplace section. Petzinger's inspiration for his column grew from a personal epiphany. "I had written about people and institutions locked in struggle not over the creation of wealth but over its control. After devoting exactly half my lifetime to writing about business, I knew little about how business actually worked."

"The Front Lines" focused each week on one business and explored how it exemplified some principle or dynamic of our changing economy. Innovation, managing complexity, human values, feedback systems, and customer service were recurring themes. He and I became acquainted when I responded to one of his columns about applying biological metaphors in business situations. (My research had found that support representatives tend to listen better for customer feedback about products when the representatives are involved in applying what they hear in the product improvement process, which has a biological equivalent in research on songbirds by Professor Williams of Williams College.)

The New Pioneers essentially is the culmination of the knowledge that Petzinger has gained over the years of writing his columns. The book is a compendium of Petzinger's columns united under a central thesis: forces in society are changing the rules of business and those who understand, follow - and develop - those rules will be the future success stories in our economy and society. The new pioneers come in all shapes and sizes with different motivations, but sharing a common link. They engage in practices spawned by the core of our biological existence as described by systems theory.

Successful organizations will be the ones that trade in the command-and-control management practices for sense-and-respond management. Rather than shielding the organization from the chaos of the environment, organizations should open the organization's boundaries, embrace the turbulence found there, and apply management practices that foster feedback, continuous adaptation, and self-organization. Niches are roles, not places, and innovation tends to happen of the fringes of niches as those who hold the niche treat it as a place.

In framing his argument, Petzinger draws on literature from biology, systems theory, complexity theory, and many other disciplines. (The reader will encounter passages from Abraham Maslow, Frederick Taylor, Thomas Paine, Adam Smith, Isaac Newton, Henry Mintzberg, and others. In fact, the book has an extensive annotated bibliography that can guide the reader to explore other literature.) But what will capture the reader's interest are the real world examples used to support the thesis. Here you will learn about the inner city Philadelphia pharmacy that boomed because it recognized the need to print medication instructions in the language of its customers, and about the Dausey family's grease rendering business that succeeded because of its superior customer service, countering the attempts by the large competitor in essence to buy Dausey's customers. Then there's the LDS Hospital that allowed the nursing staff to lead re-engineering efforts. Surgeons controlled medical procedures, but the customer's concerns drove the process of outpatient operations. The nurses recognized that the patient's sense of a loss of control could be countered by allowing them to wear underwear under those flimsy hospital gowns!

Each reader will likely find a favorite story. Mine is the Zildjian cymbal company that succeeds not through its centuries-old alchemy secrets but through its tight connections to its customers, the professional drummer. (The late Buddy Rich asked the Zildjians to care for his drum set in perpetuity.) By listening to its customers' needs and dedicating itself to its mission, product innovation has been a staple of Zildjian's success. As Petzinger states, Zildjian has "coevolved" with its customers, exemplifying a focus not on transactions but on relationships, "connexions and dependencies" - to use Adam Smith's term. Further, they placed a studio for visiting drummers to test new products in the middle of company headquarters to keep all employees connected to the core mission. (Has any company similarly placed a support center to keep product engineers equally grounded?)

The author's prose makes this an eminently readable book. Petzinger is truly the raconteur of business. At times, though, the reader may lose the progression of the book's central thesis as one passes from one company example to another. That aside, we in the customer support business can find many solid examples in The New Pioneers of how customer service can drive a company's success. The reader should find new ideas for managing a service business to create essentially human organizations that continually enhance the value delivered to employees and customers. If the book inspires you to change some management practices, share it with Tom - and me.

When Sparks Fly: Igniting Creativity in Groups, Dorothy Leonard & Walter Swap, Harvard Business School Press, Boston, 1999.

Recently, our PBS station in Boston broadcast a NOVA documentary on Breaking Nazi Secrets - how the British successfully broke the Enigma coding machine that the Nazis used to encrypt messages during the war. The intelligence gained as a result of breaking the code was vital to prosecuting the war, but the code-breaking project wasn't haphazard. The group assembled was a mixture of mathematicians, physicists, musicians, those who loved crossword puzzles, and others from diverse backgrounds, motivated with as strong as an incentive as there could be: saving their nation. While not an example cited in When Sparks Fly, the innovation spawned during wartime Britain is a classic example of the argument put forth in the book, which is that creativity is a group process that can be managed.

Being familiar with Professor Leonard's previous research and writing, I read this new book with expectations for stimulating reading, and those expectations were fulfilled. Professor Leonard's work focuses on innovation processes, and her co-author is a social psychologist. They have merged the perspectives from their two fields to present a useful text on how to promote creativity and innovation within an organization.

The authors challenge many myths about creative innovation, most notably that creativity emanates from a few highly creative people. Rather, they argue that teams, composed of a diversity of individuals, are the best vehicle for innovation in an organization. Further, they argue that innovation is not some haphazard, random process. In fact, for best results it must be a structured and managed process. This may seem contradictory, but the provision of structure allows greater freedom within those bounds. (The classic analogy is that driving regulations give drivers freedom within those bounds. If there were no rules, there would be anarchical chaos and a freedom that provides little net benefit. I know; I drive in Boston.)

Successful management of innovation requires recognizing the five steps in the creative process: 1) Preparation, 2) Innovation Opportunity, 3) Divergence, 4) Incubation, 5) Convergence. The first two steps lay the ground work for creative innovation. There must be some need to innovate, and groups must be assembled. These teams must be diverse, not necessarily in their ethnicity, but in the range of functional backgrounds, cultural backgrounds, and more importantly, in a range of thinking styles. Best results occur when teams are comprised of broad, non-linear thinkers mixed with analytical, linear-thinking individuals. Don't confuse intelligence with creativity, the authors warn. Research shows the two do not correlate as strongly as we might expect. Properly conformed, such groups promote the creative abrasion that identifies and develops the best option.

The final three stages lie at the heart of the creative experience. This may be envisioned as a pair of funnels with the wide mouths pointed at each other - with a gap in between. The best ideas come from divergent thinking, that is, promoting the group to expand their thinking and consider a full complement of possible approaches to addressing an issue. Here's where the diverse group composition comes into play. The best way to create "out of the box thinking" is to have a team of people whose boxes don't overlap, maximizing the size of the team's box. Managers must be certain to encourage group normative behavior that lets sparks fly from creative abrasion while avoiding interpersonal abrasion. As the title of the book suggests, this chapter is the centerpiece of the book.

Having developed a broad complement of ideas, the next step is to "sleep on it." Research shows that ideas develop most fully if given a period to incubate. During seemingly mindless tasks that rest the brain, connections can be formed and new insights can be found. Archimedes knew what he was doing when he took his famous bath. (I personally do some of my best thinking while riding the commuter train, mowing the lawn, or building stone walls.) This incubation period is the space between the funnels.

Now comes the stage that most of us would not consider innovation: converging on a best option and developing that to its fullest. Without convergence we would never actual implement anything, and implementation is part of the innovation process. The managerial and facilitative skills for convergence, the narrowing down in the funnel, are much different from the skills needed for divergence. For convergence the facilitator must get team members to consider the organization's mission and priorities, and the group must examine the trade-off among the options. In the final chapters, the authors describe the importance of the physical and the psychological environment to these activities.

When Sparks Fly presents a cogent, well-formed framework for team-based innovation - and it's eminently readable. The authors objective was to write a book that could be read on an air flight. They succeed by providing numerous examples from their own and others' research to support their framework. The end note references are extensive. They also place many well-known examples into the context of their argument. For example, the group dynamics of President Kennedy's inner council during the Bay of Pigs fiasco is contrasted with the dynamics during the Cuban missile crisis as an example of the necessity of both divergent and convergent thinking.

The authors succeeded in stimulating this reader's thinking. At many point in the books, I paused - letting the ideas incubate Barton and Swap might say - and jotted down notes about projects of mine. If innovative team processes are important to your business, you should benefit from this book. If you just like reading about innovation, you will also enjoy the air flight.

The Mentor's Spirit: Life Lessons on Leadership and the Art of Encouragement, Marsha Sinetar, New York: St. Martin's Press, 1998.

Tom Morse. The name means nothing to you unless you were a student in Wakefield or Lynnfield high schools north of Boston in the `60s and `70s (or perhaps you know another Tom Morse). Tom, who passed away two Decembers ago, was my history teacher who became a close and valued friend. He influenced my life in ways that only special teacher-mentors can. As I read The Mentor's Spirit, my thoughts harkened back to Tom. In fact, I'm writing this review sitting in my living room with the backdrop of a watercolor winter landscape painting done by my mentor. The fact that he was such an accomplished painter as his love and avocation is part of his influence upon me. "If our mentors reflect the deepest truths of their own existence, something they impart will be worth learning."

The Mentor's Spirit is a book for a contemplative moment when you have to time to think and reflect about your spiritual side and how it can influence all aspects of your life, including your professional life. This is also a book to be discussed - or argued - with others. If you're looking for tips and techniques or some cookbook formula for mentoring your staff, you will be disappointed. Instead, The Mentor's Spirit goes to the essence of mentoring. "A mentor is a person , a guide, or a teacher - the keeper of selective wisdoms that we hope to gain… The mentor's spirit is the `almost anything' that deepens our sense of the sacred or our understanding or transmits a kind of gladness about life itself."

Mentors are "artists of encouragement" who help others find what makes their lives meaningful. These "artists" may be found in many places. Our mentors may be found in books (as Bill Russell did as a child), in movies, in art, or in those with whom we interact. Sinetar is disparaging of what passes for mentoring in many corporate circles. "Productive mentoring demands an educative dialogue - a real relationship of mind and heart - not canned speeches or mechanized training blueprints." Mentoring is not something that can be codified in a company's policies and procedures. It must come from within the mentoring individual. It must be learned before it can be practiced well.

But Sinetar does believe we are all part of an interconnected community, and as such we all influence each other. Thus, we are all mentors to each other - though not always in the positive sense. Her argument is that we should be cognizant of our influence, recognizing our inherent mentoring responsibility to those we touch. Yet, the mark of a successful mentor is one who helps those mentored to excel in their own selves, discovering their own "spiritual intelligence." A good mentor fosters self-reliance. But can we all have those special traits - sincerity, virtue, a nonjudgmental attitude, and empathy - of great mentors? You may well reject some of the fundamental premises behind Sinetar's arguments. As one with a strong libertarian streak, I know I found some arguments contrary to my basic principles.

Sinetar organizes the book around three major themes, 1) Being: The Key to Mentoring, 2) Silence Invites the Mentor's Spirit, and 3) The Leadership Links to Mentoring. Each them contains four "life's lessons." The passages quoted above give you a flavor of Sinetar's writing style. Some readers may find the book's concepts too abstractly presented. I would agree; it is the specific stories that pull the book out of total abstraction. The prose should challenge you to pause and reflect. You may find that you've only read ten pages in an hour because you've been lost in thought. The book is also available on audio cassette, but don't get lost in thought while driving.