I had to read, I mean listen, to this book. My brother was raving about it, it was being mentioned everywhere, I saw a presentation by Malcom Gladwell at an AIGA conference . .  I had no choice.

The big idea in this book is that really successful people, like really successful, are not products of chance but of systems that are selectively biased to favour certain individuals over others. The best example, given at the start, is that of hockey and football (soccer, hello Americans ) players. By setting eligibility dates for admission the scales are tipped to favour those who are the most mature by those cut-off dates.

Another noteworthy example is Bill Gates who was fortunate enough to go to a high school that happened to have mothers who raised money to invest in the science department, who happened to have a pupil whose father donated advanced computing equipment, and also happened to go to a college with some more computing facilities . . etc. etc. etc. And now we have one of the richest men in the world.

Now instead of crying over all the opportunities I didn’t know I didn’t have till I read this book, I want to try something out. A point Gladwell makes is that if we identify areas in which we are disadvantaged we are able to systematically overcome them. If it takes 10,000 hours to become an expert at something, then I better start counting those 10,000 hours, shouldn’t you?

But just as important were the ideas with which they shaped this new company. How do you build an innovation machine? Allow researchers to pursue personal interests that may not have short term goals but may be of long term strategic importance.

Giving colour and insight to this story are Morita’s reflections on Japanese history, work culture and the future. If you want to understand a little bit of where “life-time employment” came from then read this book.

The book meanders in some places and has personal opinions mixed in with factual information but it is was an easy read.

I will leave you with this quote of Morita speaking about his colleague Professor Ibuka -

"Ibuka is a great person with great leadership qualities – he attracts people to him and they invariably want to work with him. In fact, the history of our company is the story of a group of people trying to help Ibuka make his dreams come true. He never believed in one-man management. It was not only Ibuka’s genius and originality in technology fields or his ability to look in the future and accurately forecast for us accurately that struck everyone so forcefully, but his ability to take this group of young and cocky engineers and mold them into a management team that could cooperate in an atmosphere where everybody was encouraged to speak out."

I might have overstated things when I said it was a rag to riches story. Morita’s family had a successful family business and he had been groomed, as the first son, to take over. Which brings us to …

The author thoroughly explores the differences between these two companies – one a well respected icon in electronics and the other a young upstart with a coloured past. And comes to rest on the conclusion that it is the companies deep seated structures, processes and environments which have allowed Samsung to not only catch up but to overtake Sony.

In a summary that will not do justice to the book, Samsung has a strong command and control structure that has allowed them to make strong profits from building parts for other companies, mainly memory chips, at the best price. They invested aggressively in their business and by some clever strategic thinking positioned themselves to become a quality brand to escape the harsh realities of always trying to be the cheapest bidder.

Sony because of their charismatic founders Akio Morita and Masaru Ibuka embraced an open culture that allowed creativity to flourish. They focused their attention on premium products and creating markets. That worked well in the beginning but managing a global enterprise has been a challenge for their successors.

It is like reading a book of modern warfare but nobody has to die. In fact, for a while neither of these companies were in direct competition with each other.

What is in it for you? Are you in an industry where you are trying to make more for less or you want to create something so cool everybody will pay you just to look at it? I find myself leaning towards the latter and this is a history lesson that will be good to learn from – if you don’t want to be overtaken like Sony has been. But the story isn’t over because Samsung is struggling with innovation and Sony have the oppotunity to learn from their mistakes

At the same time I was reading this book I was also reading…

The main argument of the book is this – there are two general economic principles, the economy of things and the economy of information. They are unique and are governed by different rules. Take a letter for example. The value of that letter is made up of the physical artifact that it is printed on and the information it contains. What would happen to its value if you were to separate the two? Would the letter become worthless? Think of maybe a love letter or a degree . . a prescription perhaps . . . hmm.

That is what is happening all around us. Computers have enabled us to separate the economy of information from their physical objects and the crazy thing about the economy of information is that the cost of creating new information is approaching zero – it scales logarithmically. You print your first book with the first printing press – how much does it cost to print the next one? I write a blog. How much does it cost to reproduce my blog somewhere else? Nothing.

With all this information – as your mailbox will testify after a you go on holiday – it creates an opportunity for someone to provide a service to navigate this ocean of data and make it meaningful – search engines. And by becoming gate keepers and aggregators they recreate value in new and creative ways. Pay-per-click? Google ad-sense? Who saw that coming?

Would Wal-Mart be Wal-Mart without the intense cost cutting that is made possible by the advanced information systems that they use to manage their suppliers? At the heart of the Toyota Production System is the ‘anban’ signaling protocol used along the production line which in essence is an information management tool.

It is intimidating to feel like just another 1 or 0 in the bit stream but the authors leave us with this reassurance –

What resists deconstruction is the idea of the corporation as defined by its culture and its strategy. The corporation as purposeful community. And if all else fades, perhaps purposeful community becomes the essence of identity, of management, of leadership. In a world of impersonal technical change, that is a refreshingly human thought

Speaking of new and interesting ways to use knowledge, did you know that the transistor invented by Bell Labs, which they did not know what to do with, brought fame and fortune to Sony? Which relates to a point that Drucker made that it is becoming more and more important for management to know what is happening outside of their industry because this is where transformative change is going to come from.

Did someone say Sony? Segue please…

In a collection of short essays Peter Drucker tries to answer these and many other questions, in what I found to be a very interesting book. What I find most unique is  the historical reference in which he is able to make his arguments. There is an assumption that the digital revolution is unprecedented and in many ways it is, but Ducker makes a convincing argument that it has a precedent in the revolution brought about by the railroads in 1829.

Also enlightening are his views on what it is going to take for corporate, government and community based organizations to create urban societies that allow people to develop a sense of fulfillment given the dislocated and highly mobile nature of a new work culture.

What is worth noting is that economies are changing from manufacturing driven to knowledge based economies. And this is very clear if we take a look at the quintessential manufacturing process – car manufacturing.