Baseball Hacks

Posted on: December 9th, 2011 by
Comments Disabled

by Joseph Adler

For me, it was the numbers. I didn’t really discover baseball until I was in college, in the 80s, when a roommate left a copy of that year’s Bill James Baseball Abstract in the suite. I was smitten. It wasn’t just the statistics – it was the analysis and the writing.

James understood that baseball statistics were individual performance in a team context and knew how to separate the two. He knew how to make the numbers tell a story. It wasn’t just playing games with numbers, it was bringing insight into the game to the numbers. Every article, every year, had something fresh and surprising, putting all those statistics together in a different way. Most importantly, he knew how to write.

James stopped writing the Abstract because he found that, while he still loved the game, he had run out of ways of surprising people. But it left me in an awful fix. At that time, there was virtually no free historical or current data available on a large scale. Current data was there, every Tuesday and Wednesday, on the USA Today sports page. I might be able to punch in a few numbers and come up with the predicted wins for the teams, or with the runs created for a few players. But other than that, there wasn’t much out there.

What a difference a decade makes.

In true Army of Davids fashion, James also organized a fans’ response to the Elias Bureau’s hoarding of official stats. He developed an easy-to-learn, fairly-easy-to-use scoring system, and then helped organize a network of fans to score games and collect the stats on their own. This had the effect of breaking the Elias monopoly in stages, to the point where even Elias itself uses the Project Scoresheet scoring system.

There are now publicly available, real-time and historical databases online. There are publicly-available free stats packages and databases to help analyze them. Fortunately, Baseball Hacks can help you locate, set up, and use parts one and two. You still have to provide the third ingredient – analytical skill – on your own, though.

The name sounds like a John Kruk at-bat, but in fact, it’s a brisk and illuminating tutorial in how to load those public databases onto your own computer’s database, and then how to access them for statistical analysis.

While Adler does spend some time on Excel, his tools of choice are MySQL and a powerful stats package known as R. Both have the advantages of being free and open-source, so freelancers are continually developing new plugins for them. MySQL doesn’t have a built-in GUI, as does Access, though Adler does guide you to free downloads of Officially-Sanctioned tools.

For both R and MySQL, Adler guides you completely, if somewhat briefly, through a generic installation and basic configuration. He also shows how to set up and populate a MySQL database with those fat, juicy stats, and the how to get R to talk to MySQL. In fact, the bulk of the discussion is technical, rather than baseball-focused, making me wonder if the book isn’t a little bit of a trojan horse itself, designed to sneak in technical competence under cover of sports fanaticism.

The book is probably about the right length for the subject, and it assumes a minimum of knowledge of both subjects, geared to someone thirsty for more. The subject obviously appeals to fantasy-league seamheads, many of whom have some technical background to start off with. The problem is, the cool tool-building sometimes comes at the expense of baseball exposition.

Adler shows a fair number of cool stats and tools, like linear weights and runs created. But in keeping with the rest of the book, he does so with a minimum of exposition, leaving behind much of the analysis that created these tools in the first place, and that makes them so compelling. In true geek fashion, he also shows you how to set up your own fantasy league management system. With so many online tools available for just that purpose, the pages might have been better-spent explaining the Favorite Toy or Win Shares.

Still, it’s a substantial achievement to put the pieces together as cleanly has he has. Adler’s had to cover a lot of diverse ground here, and he does it fairly efficiently. He’s also provided enough documentation so that the interested reader knows where to look. And for someone who wants to use R to analyze, say, the stock market, to know where to start.

Once he finishes setting up that fantasy league.


Analyzing Business Data With Excel

Posted on: December 9th, 2011 by
Comments Disabled

by Gerald Knight

I can’t tell you how much I wanted to like this book. I’ve admired O’Reilly’s technical books for years, and now that I’ve branched out into business applications, I was delighted to see that they had, too.

When I finished business school last year, one of the classes I had to take was in financial modeling, and it had a heavy Excel emphasis. We did a little bit with Macros and VBA, but the most complex model we did was nothing compared to what this book aimed for. Finally, I was going to get a chance to really gun the program up into 6th gear. Clearly, this was a book that wouldn’t talk down to me.

Sigh.

First, even finding the spreadsheets online was a little bit of a task. The URL was only mentioned in the preface. A more prominent location would have saved me a lot of time. In fact, the data spreadsheets should be available without the code at all, just the data (in addition to the completed applications).  Most people who want to learn are going to try to work through the application from the ground up.

Secondly, having an editor do just that would have helped immensely.  I started on the first application (analyzing call center call volume), and couldn’t figure out how the predicted values were arrived at.  They weren’t spreadsheet functions, just numbers next to the raw data.  This pretty much stymied me right there, although I did go on to complete the application, skipping that part.  Still, in a book as dense as this one is, where every piece represents a potentially useful application, leaving that much work as an exercise to the reader is unnecessary and confusing.

A minor detail: when using a workbook like this, I find it’s much harder to do so if a screenshot isn’t on the same page as its description.  Flipping back and forth, again, in a book where every sentence matters, really slows down the process.

Finally, perhaps because of the above-mentioned problems, I found it hard to generalize from the applications presented.  They seemed just a little too specific to the data.

I don’t want to be too hard on O’Reilly.  It’s best-known for programming tutorials, and that’s essentially what this book is trying to be, so the company clearly has the in-house talent to make this work.  The book frankly has a lot of potential.  About twice the exposition and forcing an editor to work through all the examples would make it incredibly useful.  My guess is that it’s about 80% of the way there.  The problem is that the 20% that’s missing makes all the difference.


Learning To Read Midrash

Posted on: December 9th, 2011 by
Comments Disabled

by Simi Peters

The Biblical text is sparse. Read literally, straight through, you’d get the impression that P.G. Wodehouse wouldn’t do well among the nomads. Even the strictly narrative portions leave out most of the story, and leave room for all sorts of questions. The Rabbis thought so, too. Enter the Midrash. The Midrash – stories recorded in the Talmud and in collections – are the rabbinic attempt to fill in the gaps.

Some of these stories are exceedingly well-known; better-known, in fact, than parts of Tanach itself. Nechama Leibowitz tells of asking a class to turn to the part of Bereishit where Abraham smashes the idols. The class flips back and forth in frustration, unable to find the text. It’s a midrash, of course.

Remember that Star Trek:TNG where the crew encounters a culture that communicated entirely in metaphor? That’s kind of how Midrash works, rendering proper reading of them no simple task. They’re not only metaphorical, they’re poetic and literary, often treating the Biblical figures as literary as much as historical. They draw on diverse source texts, the original context of which is often key to getting it right.

Inasmuch as the Midrashic interpretation is the dispositive one for traditional Judaism, understanding these texts is fundamental to understanding all successive rabbinic Biblical exposition. Simi Peters, of Nishmat in Jerusalem, has stepped into the breach with Learning to Read Midrash. She provides a solid methodology to follow, but not a recipe. She takes you step-by-step, laying out the interpretive process.

Beginning with simple mashal/nimshal forms – basically extended metaphors – Peters builds up to complex, extended midrashim, composed by many authors, often using different styles and format. What if part of the mashal (the comparison) are missing or unclear? For multi-part midrashim which offer competing interpretations, what does the ordering tell us?

From there, Peters ventures into narrative expansion. These are the trickiest, their connection with the text can be the most difficult to tease out. They also contain the most fantastic stories in rabbinic literature. The proper treatment of these stories has been the source of great controversy, but I find myself siding with the relentlessly logical approach of Maimonides.

In short, the questions is: how literally did the rabbis intend these stories to be taken? Maimonides comes to what I believe is the only reasonable conclusion: the rabbis knew as well as you or I that we shouldn’t take the stories literally. Taking them as historically accurate turns you into a fool. Assuming that the rabbis thought they happened turns them into fools. It’s simply most reasonable to assume that the rabbis included them in order to bring to life philosophical truths.

Peters approaches the text with true humility. She assumes that not only the Rabbis, but also her prior teachers, know something important, and aren’t just making it up as they go along. Even when she disagrees with an approach, she gives it its due, and early on, provides a number of scholarly and rabbinic references of interest.

She uses fairly well-known subject texts, which serves two purposes. First, it’s a text that you probably already know something about and feel comfortable with it, so examining it is less intimidating. As a result, the contrast between the before-and-after magnifies the effect of the midrashic interpretation.

Including the original Hebrew midrashim in the back is a nice touch. A nicer touch would be inter-linear translations, especially since translations are used in the chapters. And nicer still would be to include the source texts used in the midrashim and their contexts. It would add to the size of the book, but would keep you from need three or four separate books open at once.

Unlike many such attempts, Peters almost never left me scratching my head, wondering where that idea came from. The interpretation may not have been obvious going in, but afterwards, never appeared invented. Sometimes the clues aren’t all there up front, but I never felt cheated. That’s what a teacher is for, after all. Writing with this sort of clarity, training minds rather than merely informing them, is a stunning achievement. I felt as though this was the book on midrash I had been waiting for, and it left me eager to start applying it myself.


An Army Of Davids

Posted on: December 9th, 2011 by
Comments Disabled

by Glenn Reynolds – Instapundit

Prof. Glenn Reynolds, that’s Instapundit to you, brews his own beer, has his own record label, and writes one of the most successful blogs on the planet. All of this is possible because of the massive increase of productivity in the last few years, placed in the hands of everyday people all over the world.

The great story, the great trend of the 21st century is going to be the 18th and 19th centuries – the movement of society from decentralized to centralized, and back to decentralized. It’s a political trend that Michael Barone has been writing about for over a decade. Its most obvious manifestation has been blogging.

Reynolds’s contribution is to show how the widespread distribution of advanced technology has profound economic and social consequences, far beyond the minute-to-minute politics that dominates the discussion. It’s not merely that the big institutions are falling apart – it’s that the big centralized institutions are being replaced, or at least finding competition in, huge decentralized institutions with greater power and flexibility. The really spooky part is that you ain’t seen nuthin’ yet.

An Army of Davids is divided into two sections – one on trends that are already underway, and another on technology that’s just over the horizon.

Yes, Reynolds writes about blogging (including some tips on successful blogging). And he also discusses the irony that the only successful same-day response to 9/11 came from passengers with cellphones. That everyday citizens were able to react more swiftly and devastatingly than several large bureaucracies set up for the purpose has been noted before. Reynolds gives tips on how to make it work next time, too.

Still, I found the most interesting chapters to be on garage bands and Third Places.

The record labels have – as usual – missed the point. Napster was a diversion. The real threat was that music-lovers would form their own community, and that bands would be able to bypass the big labels to get exposure. Likewise, the presence of safe, well-lit, friendly places with WiFi is changing the way we work, but also has uncertain implications for public speech.

At some level, the Goliaths are more like dinosaurs, but expect some to adapt rather than fight. The Washington Post appears to be trying to do both, using Technorati to turn the blogosphere into its comment section, while at the same time libeling Bill Roggio, who’s shown considerably more pluck than their own reporters. If the large record labels are the only ones able to guarantee airplay and fill colosseums right now, there’s no reason that capability, too can’t be rebuilt from the ground up, as well.

If the point of the first half is to make sense of what’s happening now, the second half tries to prepare you for what’s coming. Nanotechnology, feasible space travel, terraforming, are all on the way. And if you think you won’t live to see their effect, think again – the aging process may not be a one-way deal for very much longer. Here’s where Reynolds’s enthusiasm really comes to the fore. By the end of this chapter, I was praying for the anti-aging drugs to show up tomorrow, so I could get into shape to go colonize Mars myself.

To some extent, while the second part is more imaginitive, it’s also more limited. The effects of these technologies are much harder to discern, but thoughtful science fiction writers have tried. Reynolds might have relayed the more compelling of these. As it is, we get the following exchange with Aubrey de Grey, a leading anti-aging researcher:

Reynolds: What will life be like for people with a life expectancy of 150 years?

de Grey: [We will actually have indefinite lifespans.] Life will be very much the same as now, in my view, except without the frail people. People will retire, but not permanently – only until they need a job again. Adult education will be enormously increased, because education is what makes life never get boring. There will be progressively fewer children around, but we’ll get used to that…Another important difference, I’m convinced, is that there will be much less violence whether it be warfare or serious crime, because life will be much more valuable when it’s so much more under our control.

I’m not sure how de Grey squares “progressively fewer children” with “very much the same as now,” on either social or economic levels, but I suppose it’s a useful lesson that a brilliant scientific mind can be equally unimaginative in other spheres.

If you read Instapundit, some of the commentary will be familiar. Phrases he’s made famous – if not invented – such as, “a pack, not a herd” appear prominently. These serve more to remind you that it’s the same of InstaProf talking to you, and the book is anything but a recycling of the blog, or even the TCS columns.

Here’s a book that shows what can happen when smart people spend time thinking about social trends, even when those doing the thinking are law professors. It helps, of course, if they’re also science fiction fans and futurists.


The Spychips Threat

Posted on: December 9th, 2011 by
Comments Disabled

by Katherine Albrecht and Liz McIntyre

If Mesdames Albrecht and McIntyre are right, corporations and governments are conspiring, even as you read this, to bring on the apocalypse. Universal surveillance, in the form of nascent RFID (Radio Frequency ID) technology, is on the way, and they don’t think you’re going to like the results. They make a compelling and insightful case that RFID technology can put dangerous power into the hands of the government. But it’s a case that’s undermined – although not fatally – by overestimating the technology and misunderstanding how business works.

The principle behind RFID is simple: attach a tiny antenna to a tinier ID chip. Put the whole package on every item. Then, place readers at critical points in the supply chain. Bar codes can only tell that a Snickers bar is headed out the door; RFID tells you which one won’t be going anywhere for a while. Businesses get not only perfect snaphots but also feature-length films of their supply chains.

So far, so good. But what if the supply chain doesn’t stop at the store’s exit? What if the item in question is your registered car or its tires? Or your clothing, bought with your traceable debit card? Or you? What if RFID could track the contents of your refrigerator, your medicine cabinet, or your house? So long, castle.

While supply chain applications end at he checkout line, post-purchase applications are sold as benefitting the consumer. Tagging cars is seen as an extension of the VIN to help prevent theft. Reader-refrigerators would let you know when your tagged food was ready for the kids’ science fair. Reader-medicine cabinets would do the same for prescriptions, or warn you if you were about to mix heart drug A with diet pill B and give yourself a coronary.

Sounds cool. Until you realize that governments have a way of using technology in unpredictable and unwelcome ways. In the wake several high-profile data security breaches, the authors have imagined a number of threatening ways that ubiquitous tags could be misused. Placing RFID readers at key intersections and highway off- and on-ramps would be enough to track movements. The creation of uniform protocols actually makes rogue RFID readers easier to create, making it possible for thieves to know what’s in your shopping bag, perverts to know your underwear, or terrorists to target a specific car. And they point out that small read distances actually work to the bad guys’ advantage, avoiding signal clutter from a roomful of chips.

Still, while caution is prudent, Albrecht and McIntyre sometimes sound like Ida Tarbell gone nuts, demonizing perfectly normal business practices. They single out Wal-Mart for using its market power to push the new technology into the supply chain. But when they argue that some stores want to raise prices for bargain shoppers to discourage them, they forget that Wal-Mart’s entire business model is predicated on attracting just those shoppers. They also tend to view any efforts to make RFID systems privacy-safe as a means to implementing a giant trap to be snapped shut on us at some future date.

Moreover, they wildly overestimate the current state of the technology. Certainly they’ve done their homework on patent claims (many of the most invasive proposed uses come straight from approved patents). But they take at face value the requirement that a patented product be able to fulfill its claim. An individual RFID shelf may be able to distinguish an individual product, but getting shelves to process multiple products from multiple companies without interference, and then to sensibly process all that data downstream are only two of many serious outstanding systems engineering problems.

The Spychips Threat is a slight reworking of the earlier, Spychips. This version has several chapters aimed at religious Christians, likening plans for subcutaneous chips to the Number of the Beast. I’ve never been too interested in reading current events into biblical prophecy (for this Orthodox Jew, Revelations is of academic interest anyway), and the fact that an RFID company uses a black cat in its advertising, or that a machine-tool RFID system is called, “The Mark” isn’t all that impressive to me. Still, the success of the Left Behind series suggests a strong market for this kind of thinking, and the authors don’t overplay their hand here. People waiting to pounce on numerology equating Wal-Mart to 666 will be disappointed.

Some readers would stereotype the authors as part of the Religious Right, but their politics seem to run more along Libertarian lines, and the only public policy proposal from Albrecht’s CASPIAN is right-to-know legislation.

The fact is, these are all planned uses for RFID. O’Reilly’s RFID systems book is written by proponents of the technology, and it basically confirms both the plans and the privacy risks. The passive chips are virtually indestructable outside of a microwave, and anything that’s deactivated can be re-activated.

One might reasonably argue that a citizens who let themselves be tagged and branded are already spending their off-hours at the Two Minutes’ Hate, but that’s only true if they know what’s coming. And to that extent, The Spychips Threat is an important early-warning service. And if RFID system engineers are interested in privacy issues at all, it’s almost certainly a result of these two authors.


Winston Churchill

Posted on: December 9th, 2011 by
Comments Disabled

by John Keegan

Churchill is in fashion again. His wartime leadership made him one of the character studies in Supreme Command. He’s been used as a model of executive leadership. He and Reagan have been the subjects of a joint study. The one limitation of all these studies is that they focus on his wartime leadership, often giving little background to his earlier political career. That’s fine for most Americans – most of us probably conceive of Churchill as having emerged from the womb arguing for an increase in the air defence budget.

In fact, Churchill is a far more complex political character than we usually think of. He had ambitions back to early adulthood, and fueled by his spendthrift sop of a father’s own failed bid for greatness. As Americans, who know about “never surrender” and Iron Curtains, and all that, it’s easy to forget that before the Wilderness Years would have been neither Wilderness nor Years if he weren’t already a major public figure. By the 30s, the British public already had an image of Churchill in their minds, shaped by his earlier career.

To get a feel for how Churchill’s early public life shaped his later public life, you can either wade through Manchester’s readable books, or you can pick up John Keegan’s sketch, Wintston Churchill, as part of the Penguin Lives series. Keegan covers all the major episodes – the River War, the Dardanelles, his pacing back and forth across the Parliamentary floor, and of course, his wartime Premiership. But there’s much more to the man – even the public man – both before and, as importantly, after the war.

At first blush, Keegan might seem an odd choice for the job. He’s known primarily for his military histories, and as mentioned, this biography has a wider scope than that. But Keegan has always understood war as a political venture more than a purely military one. In that sense, Churchill’s earlier career really was preparation for his wartime and post-war leadership.

Churchill chose an odd route to public life – a military career that served mostly as a means to a journalistic one. Like the best bloggers, he could write about the Boer War and the River War because he had been there, been shot at (without result), and had the training to know what he was looking at. Michael Yon, eat your heart out. Unlike bloggers, though, the only outlet of the day was the newspaper, and he needed his mother’s considerable influence to get published at first.

From there, it was on to a political career with the Tories, mostly because that’s where his father had been. But Winston, like his father, was to champion a liberal version of “Tory Democracy” that his party wasn’t ready for, and that was better-suited to the rival Liberals. Eventually, he abandoned the Conservatives altogether, joining the Liberals in order to push greater social services and an early version of welfare and the National Health. In fact, if World War II hadn’t happened, it’s likely he’d be mostly remembered for those innovations.

His military career – resumed in earnest during World War I – also probably soured him for good on the brass. His famous description of the Great War troops, “lions led by donkeys,” probably reflected his later determination as Prime Minister to defend the average soldier against the predations of the Generals.

Churchill’s return to the Tories has also been criticized, mostly unfairly, as opportunism. By the time he crossed back, basically unwanted, Labour was in ascendancy. With the Liberals as out of intellectual steam then as they are today, the Tories really were the only party capable of opposing the radical socialism on the Labour agenda. The fact that the Conservatives failed to make the case for a capitlist program to oppose Labour’s social program may not have been primarily Churchill’s fault – he was busy fighting a war, after all. But it certainly was the party’s greatest failing, and a lesson that today’s Republicans could learn from.

Keegan’s writing is typically crisp, he keeps the story moving without glossing over events, and keeps our interest. If you’re looking for a solid, thumbnail biography that puts blood, sweat, toil, and tears into context, this is the one.


Size Matters

Posted on: December 9th, 2011 by
Comments Disabled

by Joel Miller

Of “Life, Liberty, and the Pursuit of Happiness,” it’s the last that’s come under the most sustained ideological attack over the last half-century. And while modern conservatism has always included an element of deregulation and tax cuts, it’s also fair to say that only recently has it developed popular intellectual defenses of free markets and property rights.

Size Matters fits squarely in this genre. Joel Miller makes the pragmatic case for smaller government, and basing it on two principles. First, it’s fundamentally unfair and undemocratic to expect citizens to live by laws they can’t understand and had no hand in making.

Secondly, it’s extremely expensive, in both the direct and opportunity costs of compliance. Remember that every dollar spent on compliance represents a dollar inefficiently allocated. Yet while the burdern of proof should lie on the regulators, I can personally testify that in Washington, the burnder on proof inevitably lies on the regulated. And since small business suffers disproportionately from regulation, the effect of that regulation falls disproportionately on the innovators and entrepreneurs.

The problem is that these costs are usually hidden, meaning that while there’s a constituency for every program, there’s rarely a constituency against it. It’s easy to justify their diffuse costs in light of their noble goals, and the marginal savings from any one program seems trivial. Part of the service of the book is to aggregate the costs, and then break them down again on a per-family basis, to see the cumulative effects. For too long, the cost-benefit analysis of new programs has ignored many of costs, and any honest public debate on the issue requires a fair accounting.

And the effects are staggering. Thousands of dollars per year per family. Thousands added to the cost of a car. Tens of thousands added to the cost of a house. And some of the proof is at the state level. If the states are the laboratories of democracy, then people (and capital) are fleeing the Frankenstein monsters of the northeast and California.

Miller notes that the growth of lobbying mirrors the growth of government largess. While the book was written before the current Abramoff scandals, many have pointed out since that a (not “the”) root cause of those scandals isn’t the right to petition, but the centrality of government in redistributing wealth. We’ve seen this here in Colorado on a somewhat smaller scale. This year’s large tax increase has led to more intense lobbying for those funds.

This dynamic sets up self-reinforcing cycles: few politicians will vote to make themselves less important. Moreover, new programs not only fail to deliver, but introduce market distortions that, according to inexorable logic, requite more market interference. The result may not be the old Soviet Union. but right now, even the European Social Model isn’t looking too good, either, especially to the non-parents option not to bring children into it.

It’s a pragmatic case, but grounded in theory, and Miller does a nice job of tying the two together. He makes a somewhat familiar, intellectually coherent case that government restrictions and higher taxes fail, and beget calls for more of the same. By using specific examples of how regulation and restrictions increase costs, he makes the subject easier to grasp. At the same time, he throws in enough theory to show how these costs and the activities that spawn them flow from a flawed conception of government’s role.

Size Matters perhaps relies too heavily on studies. Now, they are all publicly available and footnoted. And yet, as Miller points out, because so many effects are local – because there are so many jurisdictions at work – aggregating the effect on your mortgage is harder than it looks. If Miller’s goal is to get the average citizen to see hidden regulatory costs as he goes through his day, more specific examples would have helped.

To his credit, Miller resists the temptation to spend time on the Constitutional issues involved here. The Commerce Clause makes an appearance, but Miller never loses sight of his main theme: how regulation wastes money degrades our standard of living.

Miller winds up with a realistic conclusion: things are going to change slowly, if at all. He bases his short-term pessimism on the fact that while there’s always a constituency for continuing a program, there’s almost never a constituency for ending one. But in the long run, there’s some evidence that the success of 401(k)s, combined with the failure of mini welfare-state corporations such as the car makers and airlines are affecting our expectations for the grandaddy of entitlements, Social Security.

Size Matters is by no means the last word on the subject. Policy journals will be debating these issues for a long time to come. The book is more likely to appeal to conservatives and libertarians looking for ammunition than to open-minded liberals. But it may also help free-marketeers-by-instinct, who’ve never given much thought to the underlying principles. By outlining the case and giving it a structure, Miller is helping to build support from the ground up.


Deals From Hell

Posted on: December 9th, 2011 by
Comments Disabled

by Robert F. Bruner

One of the problems with books of historical case studies is a lack of general principles, and a feeling that the authors are looking in the back of the book for the answers. The post-mortems don’t really offer any guidance for the pre-mortem. A book like Thinking In Time, popular with the public administration crowd, seems too clever by half, proving the importance of judgment without helping much to develop it. It compares the handling of two different potential epidemics, but which one applies to the Bird Flu?

This is one reason that case studies are popular in business schools, but also seem to fall short of the goal. Since you’re obviously supposed to evaluate the case in light of the reading, after three years they seem more like a game than like real life.

An exception to this rule is Robert F. Bruner’s Deals From Hell, an examination of why M&A deals fail.

Robert F. Bruner, a professor specializing in the subject at Virginia’s Darden Graduate School of Business, presents the material systematically, if somewhat dryly. Bruner believes that M&A activity is usually successful, as opposed to the oft-made claim that 50%-80% of M&As fail. He argues in the introduction that the deals most likely to garner attention are also those most likely to fail: stock deals, for public companies, in hot markets, where the buyer is expecting too much from the deal. In fact, most M&A activity takes place among privately-held firms, where success is more likely but hidden.

The book lays out what Bruner believes to be the six most important factors in deal failure, and then proceeds to apply them to all ten cases. They are: complexity (both in deal structure and in operations), tight coupling (allowing trouble to spread through the company), flawed assumptions of business-as-usual, conceptual bias in management, poor choices, and a poor cultural fit.

The net effect is that of a buyer biting off more than it can chew. It finds itself dealing with changing business conditions at a time when its energies are absorbed by personnel issues, and its ongoing operations are disrupted. If it puts off integrating operations, the combined companies may not see the returns on investment they had expected.

There are ways to avoid these monsters. Creativity in financing can create incentives for management teams to work together. Not getting swept up in a hot market can avoid the massive overpayments (and up-front stresses on the buyer’s finances) evident in almost all of these deals. The buyer should almost never look at the seller as its savior – that leads to almost all of the six factors.

Perhaps most importantly, executives need to remember that the only growth that matters is in economic value. All those other measures – returns, cash flow, profit margins, are outgrowths of well-run businesses adding economic value. Growing the company by acquisition alone isn’t sustainable, and it encourages executives to venture further and further afield from their own Hedgehog Concepts. Executives need to see acquisitions as part of a growth and company strategy, an admonition ignored almost as often as it’s made.

Each case illustrates all six weaknesses, but emphasizes two or three. The only case I’d object to is the proposed Dynegy-Enron merger, since by this time in Enron’s life-cycle, their business model was inseparable from their fraud, overwhelming other aspects of the case.

One questionable detail from the introduction was his assertion that mergers between equals might be more successful, speeding the integration process. This would contradict both the rest of his book and actual experience. Jack Welch argues in Winning that there really is no such thing as a merger among equals; that the term is crafted to keep feelings from being hurt; that one side is always stronger in reality, and that hiding that fact just postpones the inevitable and necessary restructuring. Indeed, Bruner’s own well-documented assertion that a company should buy from strength and not to address fundamental weaknesses would also undermine the MOE concept.

But this is a detail, and hardly detracts from the rest of the work. Bruner’s writing is a little dry, but not repetitive or convoluted. The charts and graphs are tailored to the point, and not repeated on every case. And the book is well-edited; I never found myself flipping back and forth, or noting that I had just read the same sentence.

Deals From Hell contributes not only to understanding M&A activity, but also to the genre of Don’t Make This Mistake for Leaders. By giving the would-be analyst a structure within which to analyze prospective deals (and another set of criteria to evaluate failure or success), he gives some direction to that judgment.


The Rubicon

Posted on: December 9th, 2011 by
Comments Disabled

by Tom Holland

The fall of the Roman Republic has gotten a lot of attention recently, with ABC and HBO both producing series on the subject. The Founders were intimately familiar with the story, and tried to frame the Constitution, both in federalism and in the national government’s balance of powers, to make this republic more durable. Perhaps out of a sense of our own non-drift towards empire, but also perhaps out of a growing concern for the fragility or vulnerability of our own institutions of government, the period continues to fascinate. Indeed, the lessons may be legion.

While the phrase “crossing the Rubicon” is part of our language, and my guess is that a good 10% of high school students can vaguely recall “Et tu, Brutus,” the story is much longer than most people realize. Caesar didn’t cross the river until 49 BCE, but violence first appeared in domestic Roman politics 80 years earlier, with the murders of the brothers Gracchi, populists who advocated a program of land redistribution and equalization.

It helps to understand the political culture of the Republic. While the election system guaranteed that a patrician’s vote would count more than a plebian’s. universal citizenship still gave everyone a stake in the city, and created certain universal expectations. It was expected that a successful and ambitious Roman would eventual test himself in the political arena.

Since the politicians rarely differed on policy, the contests were a more reflection of individual ambition and popularity than of a given program. (Anyone with experience in academia can attest to the bitterness of battles with low stakes between large egos and strong personalities.) To some extent, this changed when the parties morphed into Caesar’s party and a Constitutional party, but when every election is a referendum on the very forms of government, the battle is already almost lost.

In addition, while there were plenty of offices, the rules governing them were numerous, and the path to advancement fairly narrow. The offices were organized to disperse rather than concentrate power, with strict term limits. The pretense for killing the Gracchi was that they had succeeded themselves as tribunes, which was supposed to be forbidden. So the first use of political violence was justified on the grounds that it was preserving the Republic’s institutions. That would be the recurring pattern. From the murder of the Gracchi, to Sulla’s depredations, to Brutus et. al. making up for Pompey’s failure.

These institutions weren’t able to survive, because the value of the prize eventually outweighed the supporting structures. It was only necessary to win the citizens of the city of Rome to win control of the Republic and its possessions. But the wealth and means of doing that, or of enforcing one’s will, came from military conquest and tax farming.

When the Republic was small, Rome occupied a much larger percentage of its wealth and population, and that population was much more engaged politically and aware of the requirements of citizenship. As the Republic’s possessions grew, the resources of half the empire were brought to bear on individual offices, and the insecure rabble of a single city. Even Caesar’s wife couldn’t resist that sort of temptation.

In fact, the decline of the Republic is really the crossing of a series of psychological and symbolic barriers, as much as physical ones. As each previously inviolable line is crossed, the resistance to the next one is weakened, and the question becomes when, not if, it would fall to a sufficiently ambitious and ruthless man. In this sense, the Rubicon isn’t unique so much as representative of a process.

The story has certainly been told before, but Holland keeps the number of characters to a minimum, a requirement in a popular history of this kind. This keeps the focus on the great personalities, and their constituencies, rather than losing us in a maze of court intrigue. His writing is solid, if not striking. Rubicon is also well-edited. I never found myself asking if I had just read that sentence, or flipping back because of some obvious omission.

The one quibble I’d have is with Holland’s equation of the tax farmers with “big business.” While this might have been the biggest business around, patronage and government favors hardly equate with a capitalist, market-driven system tied to production.

In the end, Rome wasn’t merely betrayed by its political class, but also by its non-political class, which forgot what citizenship meant. Rubicon covers somewhat familiar ground, but the lessons of how political liberty can slowly bleed away are as relevant to us as ever.


A War Like No Other

Posted on: December 9th, 2011 by
Comments Disabled

by Victor Davis Hanson

Why do we still care about the Peloponnesian War, 2500 years after it ended? Because it became the prototype war for death struggles between ideologies. With the possible exception of the Punic Wars, the Roman wars of conquest were primarily political and personal matters, only incidentally spreading the idea of Roman Law. By the time of the Empire, the Romans were more civilized, but hardly more idealistic than their enemies.

It’s also the best-documented ancient war. Along with Thucidydes’s and Xenophon’s contemporaneous accounts, the 4th-Century Athenians never stopped writing about its effects on their society and culture. Numerous classical historians have written accounts of the war, as well. After Troy and the Persian Wars, the Peloponnesian War was the beginning of western classical education (which meant basic education until Dewey).

So what need of A War Like No Other, especially on the heels of Donald Kagan’s seminal four-volume history, and it’s one-volume condensation meant for the likes of me?

Victor Davis Hanson offers a different way of telling the same story, describing not who fought where and when, but how they fought. what weapons they used, what grand strategies and battlefield tactics they conceived, and how Greek society both affected and was changed by those decisions. By breaking down the war into phases, and by describing how the war was fought, Hanson produces a more coherent narrative than his strictly chronological predecessors.

Both sides started the war with faulty strategies based on faulty assumptions. The Spartans believed they could starve out Athens, as they had so many other adversaries. The Athenians believed they could force an end to the war through stalemate.

In fact, the two main parties barely confronted each other at all at first. The Athenians had more sense than to confront the Spartans in open land combat, while the Athenians were invincible on the seas. So both sides found themselves using heretofore unthinkable tactics, targeting civilians, executing opposing generals, massacring defeated enemies. By then end of the first phase of the war in 421, a stalemate had been achieved, and a truce signed. But neither side really believed the underlying causes of the war had been resolved, and both believed the fighting would start again.

Moreover, both sides had hardened. The Athenians had been ravaged by a plague (brought on by overcrowded conditions and having been born before Ignatz Semmelweiss), while the Spartans felt continually threatened by Athenian on the Peloponnesian homeland, which encouraged their slaves to defect or plot revolt. (Slave labor was the linchpin of Spartan society, with actual Spartan warriors comprising only a tiny fraction of the population of Sparta and its allies.)

Eventually, as the Athenians missed opportunities and failed to press home their advantage, the Spartans were able to find Persian support, and neutralize the main Athenian advantage: money. By the end of the war, the Athenians were completely on the defensive, needing to maintain an qualitative advantage in every sea battle. When their luck finally ran out, Lysander sailed right up to the defenseless Piraeus, and the game was over.

Hanson is a fine writer. He has perfect pitch in his writing, and is always able to properly calibrate the level of detail, answering questions while not drowning us in irrelevancy. He also has an eye for the advantages and resiliency of democracies at war. while unblinkingly facing the burdens they fight under as well.

The intentional irony of the title is that while the War was a new thing indeed for the 5th-Century Greeks fighting it, we look for parallels in every Western war fought since, down to today: the American Civil, in the North’s attack on the South’s economic base and its slavery; World War I, as a civilizational civil war that was longer and more destructive than its recent predecessors (and which neither side knew how to win); the Cold War, in its length and ideological content; the War on Radical Islam, with its lack of a fixed front.

Twenty-five hundred years after the Long Walls came down, we still do have something to learn from this war.