The Sound of One Hand Clapping

The notion of an Irish wake on St Patrick's Day seems a bit morbid but fitting nonetheless for the venerable institution known as Bear Stearns. Its fall from financial grace was swift and sure. Financial markets today are unsure what to make of the once proud and powerful firm's untimely collapse. Thursday night's news that the Fed and JPMorgan were stepping in to prop up Bear was a clear harbinger that the end was near.

The Bear Stearns that I knew in the 90s was aggressive and smart. It had some of the most sophisticated technology on Wall Street to measure and manage their exposure to the mortgage market. Their block desk was one of the best in the business. Their support for the emerging ECN segment made them stand out. But somewhere along the way, their appetite for risk got ahead of their capacity to manage it. And in the end, what many of us feared finally came to pass: the credit crisis brought down a Tier 1 player.

The capital markets have been tested by many crises. What has consistently impressed me over a 20 year career is how resilient the market is. We are now testing new lows, personally and professionally, emotionally and financially. Many will survive and perhaps even thrive in their new home at 270 Park Avenue. That said, the swashbuckler culture that, at times, characterized Bear Stearns is no doubt gone for quite a while.

I hate to say it but perhaps the market for almost any form of risk is illiquid. If so, then it's a true Greek tragedy because firms like Bear helped create new markets by methodically and brilliantly chopping up cash flows, assigning them different risk profiles, and then packaging and selling them. Firms like Sun aided that process by providing powerful workstations for quantitative calculations and then later, when "the network (became) the computer," delivering even more powerful capability via server technology. That said though, this post is about Bear.
No doubt it's a very quiet day at 383 Madison Avenue. To colleagues and friends, my sympathies on the end of an era. To JPMorgan, please be diligent stewards of a valuable, albeit broken, asset. To the markets, use this opportunity to reprice risk not mis-price it (again). And now a moment of silence as we listen to the sound of one hand clapping.

Lawrence Scott
thanks Lawrence:)

Brainstorm Revealed - A trip to the Eisner's

Michael and Jane Eisner welcomed the Brainstorm crew to their large, secluded valley last evening for cocktails. Here are just a few candid shots from the evening -- and there will be more to come. Meanwhile, consider this post what those in the blogworld call an "open thread." That is, we welcome your comments here relating to Brainstorm in general, or any of the subjects raised in other posts.

Speaking of name dropping, here's a oh all too clever 'analysis' penned by one Paul La Monica...

"...I had an interesting one-on-one chat with Reid Hoffman, the co-founder and CEO of professional networking service LinkedIn. Hoffman, who is also on the board of several other private Net firms such as Mozilla and SixApart and is an investor in Facebook, Friendster and Digg, is a little worried that too many venture capitalists are chasing companies with bad business models."The consumer Internet landscape is between a bubble and frothy," he said. Hoffman said that he still believes in consumer Internet companies but that thanks to the success of sites like MySpace, YouTube and Wikipedia, there is a rush to fund "me-too" projects."The thing is that with so much money being thrown at the Internet, so many half-baked ideas are being funded," he said. "Look at the profusion of photo-sharing sites. Only a small percentage of them can become really meaningful."Hoffman said he also doesn't think that podcasting is a legitimate business model and that companies that are just getting into blogging now are probably too late. With that in mind, he said he's become a lot more selective and cautious when it comes to looking for new companies to invest in. Our conversation came to an end as MySpace CEO Chris DeWolfe approached us to introduce himself to Reid. Strangely enough, the two had never met. DeWolfe was very curious to hear about how much money LinkedIn was generating from ad sales and whether the company had a significant presence beyond Silicon Valley and Wall Street.DeWolfe and Hoffman promised to meet up at another time. And it makes you wonder ... as all those MySpace teens start to grow up and get jobs, maybe they will need a professional networking service like LinkedIn. Hmmmm."

uhmm, it it just me or there is just that tiny bit of smug aftertone floating between the "..bubble and frothy" ?

much ado about...?

The Daily Mail ran a story this week that the Welsh Development Agency has sent its staff on training courses in which they were told not to use this expression for fear of upsetting a person with a mental illness or disability.

Few of us would regard the word so negatively, though we might once have done so. That’s because brainstorm has had two distinct senses, one created in Britain, the other in the United States. The British one is older, recorded in a medical dictionary compiled in 1894 by George Gould. He defined it as “a succession of sudden and severe phenomena, due to some cerebral disturbance”, or in other words a transient fit of insanity. British writers used it in the following years, as P G Wodehouse did facetiously in Mike in 1909: “‘He’s off his nut.’ ‘I know. But what did he do? How did the brainstorm burst? Did he jump at you from behind a door and bite a piece out of your leg, or did he say he was a tea-pot?’”

The word was almost unknown in the USA until a sensational murder trial in March 1907. Under the headline “New York Adds a Term to its Slang vocabulary”, the Washington Post wrote: “It may be that this word occurs somewhere in the literature of insanity, but nobody excepting, possibly, a few professional students of that sort of thing had ever heard of it until Dr. Evans declared upon the witness stand that that was what ailed Harry Thaw on the night when he shot Stanford White.” Dr Evans argued that the defendant had a sudden burst of insanity, a brainstorm, that caused him to want to take revenge. This defence or something like it has often been used since, though in 1919 the Trenton Evening Times commented that it was “more or less a fake defense in the field of criminal jurisprudence”.

Around the late 1920s or thereabouts — in the USA in particular — the term began to refer to a flash of mental activity leading to a bright idea. This developed into the modern sense of an intense and often informal group discussion aimed at generating ideas and ways of solving problems. This later sense is known at least by 1940, to judge from the Times Recorder of Zanesville, Ohio, dated 5 September 1940: “This constant scientific work was not done in any eager volunteer brainstorming by ambitious army enthusiasts.” But a link with the idea of an eccentric genius or mad scientist who had productive flashes of inspiration was certainly known in Britain in the interwar years, to judge from the odd-bod inventor created by Norman Hunter, whose first book, The Incredible Adventures of Professor Branestawm, came out in 1933.

The group-creation sense came across the water to Britain during the Second World War and is now the most common one. Both in the USA and here, it has entirely eclipsed the mental illness sense, so much so that I have to assume that the promulgator of the advice is guessing that the word might conceivably be misunderstood in that way rather than taking note of its early history. The ruling is clearly an earnest and well-meant attempt at preventing unnecessary distress, but it is easy to mock it — as the Daily Mail did — as political correctness gone mad. However, the Welsh Development Agency points out that it is responsible under the Race Relations Act and disability legislation to train staff in equality and diversity issues.

Michael Quinion

Characteristics of the Creative Person

curious
seeks problems
enjoys challenge
optimistic
able to suspend judgment
comfortable with imagination
sees problems as opportunities
sees problems as interesting
problems are emotionally acceptable
challenges assumptions
doesn't give up easily: perseveres, works hard

The brainstorm - a trojan horse of mediocrity

I hate brainstorms.

I hate running them, I hate contributing to them and I hate using them to solve problems.

They waste huge amounts of time and talent and they are no fucking good at delivering decent ideas.

And so six months ago I cleansed my professional life of this trojan horse of mediocrity, favouring aggregated individual working or two person thinking sessions.

I suggest it's time you gave them the boot too.

Death the the brainstorm. Long live great ideas.

The idea of the brainstorm was developed in the 1930s by Alex Faickney Osborne, the O in BBDO (which he founded in 1919 with his mates Batten, Barton and Durstine) and popularised in a book he wrote on the subject called Applied Imagination.

Osborne believed that when creating ideas quantity breeds quality - that if you can generate enough ideas somewhere in all the swill will be gold dust.

And so that's what he built his brainstorming technique to do - deliver quantity over quality. Kind of like a Starbucks for creative thinking, you know once in a while they make a decent cup of coffee. Brainstormers are supposed to focus on quantity, not criticise other people's ideas, be as 'wild' as they want and to combine and improve existing ideas.

These rules are so pervasive in contemporary business that even the cretins on The Apprentice seem to have learned them. And it is these rules that are at the heart of the ghastliness of the brainstorm experience . An experience in which too many people, with little ultimate responsibility for the quality of the outcome whitter on for far too long to the increasing frustration of the problem owner. Frustration manifestly worsened by the cult of facilitation.

A facilitators main task is to ensure that 'everyone goes home with a balloon' after a brainstorm - that they all feel that their pointless lives have been made somehow better by this semi cathartic experience and by the lovely little warm up games that they all played. Not to mention that they all got to vote on the most simplistic and incompetent ideas with a little stash of post it notes like some kind of mutant pin the tail on the donkey game. Facilitators like pariticipants to have a nice time more than they like delivering actionable output.

But the thing that really pisses me off about this whole technique is that it brings an unwelcome democracy into the process of idea generation. Democracy is great as a way of ensuring that the will of the people is brought to bear in governing of their lives. But it pretty much ensures that blandness is the output we most readily associate with the brainstorm. In particular democracy leads to production blocking which is the loss of great ideas while people are waiting for their turn or having to listen to the irrelevant ramblings of other participants. And if that were not bad enough it ensures that the more polarising and interesting ideas are lost at the evaluation stage as everyone showers the flip chart with their 'stickies' endorsing the familiar and feasible.

And there is no evidence they actually work beyond increasing morale, team building and other such airy fairy shenanigans. Productivity loss in an inherent part of the brainstorm approach (Mullen, Johnson and Salas, 1991; Diehl and Strobe, 1987) which results from evaluation apprehension, social loafing and the production blocking I mentioned above. Much of this research shows that brainstorms are infact less effective than individuals working independently.

for my money the optimum number of people for an idea generation session is two with no facilitator hanging on. Two people that have a vested interest in the quality of the outcome and can switch seemlessly between divergent and convergent thinking until they get to the right idea which they both then build upon.

It is one of the reasons that Bernbach was a genius in putting art directors and copywriters together and a reason that startegists should also be paired, or paired with individual creatives.

And if you need any more convincing that brainstorms (and their euphomistic offspring like 'thought showers') are shit think about how easy it was to get people into the room last time you ran one. The only endvour people want to be involved in less is a four hour powerpoint presentation on the new phone system and they will make up the most outlandish excuses not to spend 3 hours in an overheated room with some idiot prancing around infront of a Nobo board for no apparant reason.

Sure have a brainstorm if you want to do a bit of team building and you don't really care about the outcome.

If not pledge today that you will have nothing to do with the bastard offspring of the advertising industry. Refuse to run them, refuse to contribute to them and never ever find yourself voting on lacklustre ideas with post it notes again.

Russell Davies

bRain iDeas

Brainstorming is a key activity in building any product. It evolves a concept into a series of ideas, and those ideas into the necessary vision to actually get started with the real work. It is a fundamental part of any business. Here are three tips on conducting brainstorming sessions:

1) Keep things visual. You have an idea, and while between two people it may be easy to be on the same page, it doesn’t always happen. So, if at all possible, draw, document, build, to make sure your vision is the same. This is probably the most valuable tip (hence it’s the first). Only if both want the same thing will things move it that direction.

2) Don’t be afraid of ideas. Any idea is a good starting point, and in a good brainstorming session, you want to get those out (again, into paper) as much as possible. You also want to have way too many, so we can weed out the worst ones afterwards. The reason why you don’t do it in the first place is because an evolution of a bad idea can be a tremendous idea. So, no ignoring ideas. No playing “devils advocate” - anything deserves attention.

3) Bring fresh people into the idea. Maybe this doesn’t need to happen on the first meeting, but you can easily “freeze” your creative juices if you don’t keep the drum going. Fresh views into your idea will be extremely valuable. Tell people what you’re thinking about, get them at a table, give everyone pens, and hack away at ideas. Seriously, combining the experience of people with their perception of your idea will generate great output.

4) It’s never early for a prototype. If you have an idea that needs to get out, a prototype may be the best solution. This doesn’t always work out well with web applications because you’re building things presented on flat screens, but why not build a prototyping toolbox with shapes and notes, so you can actually build a physical wireframe of what you’re trying to tell the rest of the brainstorming team?

Fred Oliveira