4 ms·

What most long-term investors would prefer is a cult of a 'process', rather than a cult of 'personality'. A process' is a combination of know-how + culture + r

What most long-term investors would prefer is a cult of a 'process', rather than a cult of 'personality'. A process' is a combination of know-how + culture + rules + compliance. Every business goes through cycles (eg startup, growth, pivot, then repeat) At every cycle, different personal qualities of a CEO would be more beneficial. However, a property of a company with a cult of 'process', is that the process will organically select and retain a right CEO at a right cycle. So two outcomes of the above position: a) recognizing a company with a good process, is a very important and powerful skill to have (likely Warren Buffet has it). b) averaging CEO performance without recognizing what cycle the company is at, compared to CEOs skills, is not by itself a measure of CEO performance. It is more of a proxy measure to whether the company has a sustainable and investment-ready process or not. -- By the way, with regards to > This is why it's not such a big deal for most people that Ronaldo or Messi get paid a lot more than their teammates, and the rest of society. I would challenge that, and say that it is quite abnormal, historically, for entertainers to get paid this much. The development of multiplicative technologies (radio, TV, internet), and lack of wars between the 'super-nations' -- is really what made entertainers into exceptionally wealthy profession. So, yes it reasonable to assume better performing sportman will get paid more than their team mates. But it is not reasonable that they get paid this much... that bothers me.

gotocake 8y ago
Athletes and entertainers being paid insane amounts isn’t as new as you might think, although fashions do wax and wane. https://en.m.wikipedia.org/wiki/Gaius_Appuleius_Diocles https://en.m.wikipedia.org/wiki/Gaius_Appuleius_Diocles Gaius Appuleius Diocles was born in approximately 104 A.D in Lamecum... Diocles is believed to have started racing at the age of 18 in Ilerda... Records show that he won 1,462 out of the 4,257 four-horse races he competed in and was placed in an additional 1,438 races (mostly finishing in second place). The ‘champion of charioteers’ is one of the best-documented ancient athletes, most likely because he was such a star at the famous Roman Circus Maximus. [1] Being the best in the field also seems to have allowed Diocles to perfect his showmanship. Many of his victories took the form of a ‘come from behind’ crossing of the finish line at the last possible moment. The crowds loved it. Any race with Diocles quickly became the ‘featured event’ of the day. This naturally helped Diocles make even more money. His winnings reportedly totaled 35,863,120 sesterces, equivalent to 358,631.20 gold aureus or 2,600 kg of gold, allegedly, over $15 billion in today’s dollars, an amount which could provide a year's supply of grain to the entire city of Rome, or pay the Roman army at its height for a fifth of a year. Classics professor Peter Struck describes him as "the best paid athlete of all time".
- ALittleLight 8y ago
  Records show that he won 1,462 out of the 4,257 four-horse races he competed in and was placed in an additional 1,438 races (mostly finishing in second place). >Many of his victories took the form of a ‘come from behind’ crossing of the finish line at the last possible moment. The crowds loved it. What a wonderful story. The fact that he frequently finished in second place makes me think he was often trying to pull off a come from behind victory without quite managing it.
  - mcv 8y ago
    I can see how being instrumental in creating an exciting and tight race might be more lucrative than merely winning all the time. At least when the main source of revenue is spectators rather than sponsorship.
logifail 8y ago
> I would challenge that, and say that it is quite abnormal, historically, for entertainers to get paid this much. Take a look at the salaries (certain) movie stars made in the 1930s
megablast 8y ago
> So, yes it reasonable to assume better performing sportman will get paid more than their team mates. But it is not reasonable that they get paid this much... that bothers me. Would you prefer that the money just went to the owners, instead of the players on the field?
- Gpetrium 8y ago
  I think his view comes from a 'comparables' mindset. If you are to compare everyone else in the economy to entertainers, should they be receiving the multiples that they get? It makes other questions pop-up, for example. If all the entertainer has to do is to practice and show up for the event, should he be making all of that or should a larger portion be distributed to all the other key variables that make him the center of attention?
Nasrudith 8y ago
I'm not sure that a cult of process would be desirable - even putting aside irrationality of investors in the first place (and there is plenty in that field both mostly with short-term but also with long-term). Process dominated companies often have issues with failing to adapt to a changing world as the reasons behind the process no longer exist and yet they stick with it anyway only to wind up out-competed and irrelevant. On another note CEOs are generally overcompensated - especially if they wind up getting paid well even if they run things into the ground but I'm not sure process is a good antidote - I suspect the true issue is the lack of good feedback mechanisms/incentives given how many times companies have engaged in utterly stupid moves to try to inflate stock prices or earnings temporarily. Meanwhile higher paid entertainers actually makes sense and are rational - they actually need to command the value fundamentally to be able to sustainably receive that much pay and paying them a 'reasonable' wage that massively undervalues them gives a strong incentive to jump ship when the enterprise depends upon them. It may not speak well to people's priorities given more important jobs that are paid far less but that is the economic reality.
- 75dvtwin 8y ago
  Thx for the note. So, I tend to separate a 'process' from a 'ritual'. Most organizations would have 'rituals', but not processes in the context I noted above. A 'ritual', is a process without clear goals, and without compliance and compensatory controls. So, when a company has a pow-wow annual product strategy meeting, driven by a new CEO... or a technology group holds bi-monthly Architecture board meeting, or a data governance meeting -- those are mostly rituals. Not processes. Rituals, masked as 'processes' are bad, of course. They take oxygen out of the cult-of-the-process and move it back, again, to the cult-of-personality. Which, then creates very similar 'profile' to the one of an organization that depends on a 'hero/mover and shaker/brilliant CEO'. I do challenge myself at times, to compare how my disdain for the culture-of-personality would work at a war time.. Do general win wars, or do the troops? I am going to say, at I need to learn quite a bit of more historical facts before, I can approach that subject. Which is also why, I believe, solid bias-free education in history is almost essential for the work in management consulting, large organization transformations, and even creative consumer-oriented product design. -- WRT my point on entertainers. Their talents today, are not fundamentally different than the same talents that were appreciated 3000 years ago. Because these are bound to physical human abilities (and I include comedian/actors there as well). This is in stark contrast to the professions that leverage scientific knowledge to achieve their expected outcomes (eg engineers, medical doctors, etc). There is no net-positive-to-society economic model, where we can justify an actor making more than 1000 science teachers or a 1000 soldiers. As I noted above, I think the entertainers benefited greatly from technologies, that allowed them to multiply and extend their performances in space and time. For non-sportsman entertainers , additionally the copyright system , put them on the same footing as engineers leveraging the patent system (both systems are now heavily abused to install mafia-like control over engineering or entertainment content). Lack of wars among the super-nations, and using entertainers as vehicles for political agenda, also gave them additional compensation leverage. Last 50 years, in western societies, have been exceptional for those professions. And I find their current compensations whether it is Messi or Bill Maher, or Tom Cruise -- just repulsive (and even more so, than of mediocre or even talented CEOs).

gotocake 8y ago

Athletes and entertainers being paid insane amounts isn’t as new as you might think, although fashions do wax and wane. https://en.m.wikipedia.org/wiki/Gaius_Appuleius_Diocles https://en.m.wikipedia.org/wiki/Gaius_Appuleius_Diocles Gaius Appuleius Diocles was born in approximately 104 A.D in Lamecum... Diocles is believed to have started racing at the age of 18 in Ilerda... Records show that he won 1,462 out of the 4,257 four-horse races he competed in and was placed in an additional 1,438 races (mostly finishing in second place). The ‘champion of charioteers’ is one of the best-documented ancient athletes, most likely because he was such a star at the famous Roman Circus Maximus. [1] Being the best in the field also seems to have allowed Diocles to perfect his showmanship. Many of his victories took the form of a ‘come from behind’ crossing of the finish line at the last possible moment. The crowds loved it. Any race with Diocles quickly became the ‘featured event’ of the day. This naturally helped Diocles make even more money. His winnings reportedly totaled 35,863,120 sesterces, equivalent to 358,631.20 gold aureus or 2,600 kg of gold, allegedly, over $15 billion in today’s dollars, an amount which could provide a year's supply of grain to the entire city of Rome, or pay the Roman army at its height for a fifth of a year. Classics professor Peter Struck describes him as "the best paid athlete of all time".

ALittleLight 8y ago
Records show that he won 1,462 out of the 4,257 four-horse races he competed in and was placed in an additional 1,438 races (mostly finishing in second place). >Many of his victories took the form of a ‘come from behind’ crossing of the finish line at the last possible moment. The crowds loved it. What a wonderful story. The fact that he frequently finished in second place makes me think he was often trying to pull off a come from behind victory without quite managing it.
- mcv 8y ago
  I can see how being instrumental in creating an exciting and tight race might be more lucrative than merely winning all the time. At least when the main source of revenue is spectators rather than sponsorship.

logifail 8y ago

> I would challenge that, and say that it is quite abnormal, historically, for entertainers to get paid this much. Take a look at the salaries (certain) movie stars made in the 1930s

megablast 8y ago

> So, yes it reasonable to assume better performing sportman will get paid more than their team mates. But it is not reasonable that they get paid this much... that bothers me. Would you prefer that the money just went to the owners, instead of the players on the field?

Gpetrium 8y ago
I think his view comes from a 'comparables' mindset. If you are to compare everyone else in the economy to entertainers, should they be receiving the multiples that they get? It makes other questions pop-up, for example. If all the entertainer has to do is to practice and show up for the event, should he be making all of that or should a larger portion be distributed to all the other key variables that make him the center of attention?

Nasrudith 8y ago

I'm not sure that a cult of process would be desirable - even putting aside irrationality of investors in the first place (and there is plenty in that field both mostly with short-term but also with long-term). Process dominated companies often have issues with failing to adapt to a changing world as the reasons behind the process no longer exist and yet they stick with it anyway only to wind up out-competed and irrelevant. On another note CEOs are generally overcompensated - especially if they wind up getting paid well even if they run things into the ground but I'm not sure process is a good antidote - I suspect the true issue is the lack of good feedback mechanisms/incentives given how many times companies have engaged in utterly stupid moves to try to inflate stock prices or earnings temporarily. Meanwhile higher paid entertainers actually makes sense and are rational - they actually need to command the value fundamentally to be able to sustainably receive that much pay and paying them a 'reasonable' wage that massively undervalues them gives a strong incentive to jump ship when the enterprise depends upon them. It may not speak well to people's priorities given more important jobs that are paid far less but that is the economic reality.

75dvtwin 8y ago
Thx for the note. So, I tend to separate a 'process' from a 'ritual'. Most organizations would have 'rituals', but not processes in the context I noted above. A 'ritual', is a process without clear goals, and without compliance and compensatory controls. So, when a company has a pow-wow annual product strategy meeting, driven by a new CEO... or a technology group holds bi-monthly Architecture board meeting, or a data governance meeting -- those are mostly rituals. Not processes. Rituals, masked as 'processes' are bad, of course. They take oxygen out of the cult-of-the-process and move it back, again, to the cult-of-personality. Which, then creates very similar 'profile' to the one of an organization that depends on a 'hero/mover and shaker/brilliant CEO'. I do challenge myself at times, to compare how my disdain for the culture-of-personality would work at a war time.. Do general win wars, or do the troops? I am going to say, at I need to learn quite a bit of more historical facts before, I can approach that subject. Which is also why, I believe, solid bias-free education in history is almost essential for the work in management consulting, large organization transformations, and even creative consumer-oriented product design. -- WRT my point on entertainers. Their talents today, are not fundamentally different than the same talents that were appreciated 3000 years ago. Because these are bound to physical human abilities (and I include comedian/actors there as well). This is in stark contrast to the professions that leverage scientific knowledge to achieve their expected outcomes (eg engineers, medical doctors, etc). There is no net-positive-to-society economic model, where we can justify an actor making more than 1000 science teachers or a 1000 soldiers. As I noted above, I think the entertainers benefited greatly from technologies, that allowed them to multiply and extend their performances in space and time. For non-sportsman entertainers , additionally the copyright system , put them on the same footing as engineers leveraging the patent system (both systems are now heavily abused to install mafia-like control over engineering or entertainment content). Lack of wars among the super-nations, and using entertainers as vehicles for political agenda, also gave them additional compensation leverage. Last 50 years, in western societies, have been exceptional for those professions. And I find their current compensations whether it is Messi or Bill Maher, or Tom Cruise -- just repulsive (and even more so, than of mediocre or even talented CEOs).