Thinking About Thinking

The Trash Economy

Posted in Philosophy, Pop Culture by larrycheng on June 14, 2012

They say that one man’s trash is another man’s treasure.  Unfortunately, this statement is more reality than idiom for a large swath of the global poor that find their daily sustenance in city dumps.  Perhaps the only shortcoming of this statement is that it leaves out the women and children that also scavenge city dumps around the world.  Alas, city dumps are brutally equal opportunity.

The city dump pictured above (June 2012) is in Guatemala City.  The specs in the picture that look like people, are in fact people.  They are referred to as scavengers in the local community.  There are 13,000 of them that live in 16 slum communities surrounding the dump.   Since the dump is located at the bottom of a canyon, it requires at least an hour walk down the canyon to get there.  The people in this community are scavenging for recyclables that they can bundle and sell.  On a typical day, they will work 14 hours and might earn $3 to $6 for the materials they collect.  That’s before they pay a truck driver $2-$3 to drive their collections out of the dump.  Mondays are typically good days because there’s more trash to sort through from the weekend.  They risk themselves daily against the garbage trucks whose drivers have learned to ignore their presence.  It is common for people to get run over or lose limbs.  The dump has a preponderance of children – who are working.  Many parents are forced to trade the long-term value of education for the near-term necessity of income.  If you ask a child in this dump what they want to be when they grow up, they will say truck driver.  For what better job can there be than the one who they pay $2-$3 to every day?  This is the daily reality for some of the poor in Guatemala City.

Sadly, poverty looks the same around the world.  The city dump pictured below (April 2012) is in Cebu, Philippines.  Children are born in this dump.  Umbilical cords are cut with sticks.  Shelters are built out of trash on the worthless land surrounding the dump.  Proximity matters to have fast access to prized trash.  Drug abuse and alcoholism are common to blunt the full and perverse effect of the daily routine.  The cycle repeats, for generations.

Thankfully, there are people who have dedicated their lives to care for the people in these dumpsite slum communities.  In Guatemala City, it’s Potter’s House.  In Cebu, it’s Grace Community Empowerment.  In both cases, despite the dumpsite being a patently dangerous place, the staff members for these organizations are protected by the very people they serve.  Walking around with them in the chaos of a dump, you would actually feel strangely safe.  These organizations have had a profound impact on the lives of those they have served.  They have helped parents create businesses.  They have enabled children to go to school.  They have treated wounds and delivered babies.  They have listened and cared.  But, probably most important of all, they have treated a community of scavengers, not like scavengers at all, but with the decency, love, and respect that all human beings deserve.  For that alone may be the starting point for a brighter future.

The Mythical “A” Player and The CEO’s Real Job

Posted in Founder-Owned Businesses, Growth Equity, Venture Capital by larrycheng on June 1, 2012

Every venture-backed CEO wants “A” players at every executive position.

“A” players are executives that are 10x more productive than their peers.  They are equally excellent strategically and operationally.  They are equally capable at rolling up their sleeves or leading others.  They thrive –  with or without direction.  They are big picture and detailed.  They are the perfect mix of confidence and humility.  They fit into any team culture, thrive under any leadership style, and raise the game of everyone around them, while befriending them all at the same time.  Best of all, they miraculously fit within your pay scale, and you can retain them despite brutal competition for their services.  “A” players are perfect –  except for one small issue –  as defined here, they don’t really exist.

In reality, all human beings have strengths and weaknesses.  There are certain support structures and cultures within which we will thrive, and others in which we will not.  It’s the rare person who is a persistent “A” player across any and all circumstances.  A more realistic assessment is that many of us are “B” players who could perform like the “A” player in certain environments and perhaps even function like “C” players in other environments.  We are profoundly influenced by co-workers, firm cultures, leadership styles and roles –  rather than completely set apart from them.  We are not robotic in the execution of our talents.

Therein lies one of the most important roles of the CEO.  Many CEOs come with the emphasis that they’re trying to hire “A” players at every role.  It’s an admirable goal, but may have a misplaced emphasis.  The supposed “A” player arrives and 6 months later they are functioning like a “C+” player.  The natural conclusion is that it was a hiring mistake –  stoke up the recruiting engine and go out looking for that “A” player again.  This might still be the right answer, but it may miss an important point.

The point is that a CEO’s job is to build a championship team, and that may be distinctly different than building a team of champions.  A CEO’s job, when it comes to human capital, is to create the environment which will get the best out of people.  Some of that is around hiring the right people.  But, there are important elements to the equation that are completely distinct from hiring.  There are important ingredients like firm culture, organizational structure, leadership style, delineation of roles, team dynamics, development, and others –  which can be the difference between the same person functioning like an “A” player or a “C” player.

While I am loathe to use overused sports analogies –  this dynamic shows itself very clearly in sports.  It is not uncommon at all for a player of average historical performance to change teams –  with a different system, different set of teammates, different culture, etc. –  and to perform like an All-Star (e.g. Patriots’ WR Wes Welker).  And, it is not uncommon at all for an All-Star to change teams – and perform like a mediocre player for the exact same reasons (e.g. Red Sox OF Carl Crawford).  This dynamic plays itself out just as frequently in the corporate world.

Therefore, it is important for leaders of companies to not only hire excellent people, but to create a culture and system where the people they hire can and are likely to excel.   For whether an executive becomes an “A” player may have as much dependency on the talents of that executive as it does the leader they’re working for and the environment they’re working within.

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