It's only when I started reading this book that I realized I’ve already read it! Anyhow, I thought I hadn’t finished it the first time around so I read on. This book is similar to Freakonomics in that it looks at every day situations and explores them in a way a layman would not normally have thought about the subject.
It’s a good book but not as good as Freakonomics, that said, if you like to read non-Fiction that educates without boring you to death, then this is one you’ll enjoy.
Example scenarios explored in the book include:
Why coffee joints that sell coffee at daylight robbery prices aren’t actually making much money.
What negative externalities are, for example pollution, and how they should be solved vs. how they are currently solved.
What positive externalities are and how you are benefit from them without knowing it.
What happens when one side in a transaction knows a lot more than the other side, for example when you're trying to buy or sell a second hand car (Akerlof's lemons). This is known as asymmetric information.
What would happen if insurers sold insurance without a deductible (also known as an excess in Britain)? - this is the moral hazard problem.
Personally, I find these kinds of problems fascinating that's why I did my degree in Economics. If you don’t have an Economics degree but want knowledge on some basic economic fundamentals so you can look really smart amongst your friends, grab your copy on amazon.com or amazon.co.uk.
As an business owner I think this is a must-read because when you see what you think is a great opportunity to make money you might actually be wrong. For instance, most laymen would assume that coffee shops in train stations are raking it in because they don't have any competition. In reality, it's probably the landlord of the shops that's enjoying most of that cashflow (The Undercover Economist explains why) so what business opportunity should you be exploring? Opening a coffee shop or owning prime real estate?
Daniel Pink explores the issues surrounding what motivates people. Key to his analysis is the argument that people generally enjoy work and that the stick and carrot approach favored by most businesses to encourage people to work may actually me demoralizing and counterproductive because it strips the implicit enjoyment out of work. I fully agreed with this premise, I think it is true for me although it is not necessarily true for all people.
That said, I did not agree with every example he gave, for instance, he presented a study showing that if people are paid to give blood, fewer people give blood because the good-will aspect is taken out of the giving. This may well be true for the developed world but I know for a fact that Malawi has increased blood donations by providing some food and a generous “expenses” allowance. In a country that is so poor even quite a small amount can be a powerful motivator to donate blood, I gave blood myself but gave my money away. Perhaps Daniel’s argument explains why I felt the need not to keep the money.
My favorite take-away from this book is the idea of a ROWE (results-only-work-environment), that is, a working situation where people are given targets and tasks of what needs to be achieved but are given carte blanche on how it is achieved – they don’t even have to come to work – they can work from wherever; this would suit me just fine. I constantly talk about how I hate waking up to be in my office from 7.30 to 7.30, those hours don’t suit me at all. I love work for work in itself but I loathe being micro-managed and I despise face-time even more. It’s Saturday and I started this write-up at 4.50 a.m. because for today, that is what is convenient for me, most people are asleep now and probably will be for quite a few more hours but that’s what suits them. More businesses need to take a serious think about how they could be more ROWEy (yes, I coined that phrase) because it is not only intellectually appealing, it has been shown to be very successful by those that have taken the step. Amongst many things, employees are happier, productivity rises (increasing revenue) and turnover falls (reducing hiring costs).
Time allowing, I love to read. If I read anything interesting, I will blog about it here.