Worth Reading

The emergent theme: mastery of craft and practitioner awareness as vehicles to engage constructively with inter-group, stochastic processes.

· Nu Testaments: James Parker posits that the high-profile religious conversions of Korn‘s Brian ‘Head’ Welch and Reginald ‘Fieldy’ Arvizu are the flipside of drug abuse and nu-metal touring. Will they appear on Celebrity Rehab with Dr. Drew? Will they join the 25th anniversary tour of Christian heavy metal band Stryper?

· Newsted on Metallica: ‘I never looked back’: Good advice from the ex-Metallica bassist on how to handle life after leaving a super-team: make an independent course, don’t live in the shadows of past successes, and keep the door open for future one-off collaborations. Update: Metallica.com’s 3am message and Blabbermouth’s coverage of Metallica’s Rock And Roll Hall of Fame induction.

· Inside a Hedge Fund Meltdown: Hedge fund trader Victor Niederhoffer gives his side of the story about the Refco transaction that led to his ‘blow up’ during the 1997 Asian currency crisis. What a difference a few hours could have made . . .

· Impossible Frontiers: Andrew Lo‘s research sits at the nexus of quantitative finance and practical experience in running a hedge fund, AlphaSimplex. This paper (abstract) co-written with Thomas J. Brennan suggests limitations in the Capital Asset Pricing Model, which determines an appropriate mix of risk and return for a diversified market portfolio, and has implications for funds which rely on short-selling to generate alpha, or investment returns above the market benchmark and vetted for risks.

· Credit Suisse Asian Investment Conference 2009: view the keynote panels and read the conference guide.

· Double Standard? CEOs who want a bailout often adopt the rhetoric of Gary Hamel and C.K. Prahalad‘s book Competing for the Future (1994): government money is necessary for industry survival. James Surowiecki’s ‘paired study’ of the US auto and banking industries shows why the Obama administration’s private equity advisers are pulling the plug: years of firm mismanagement, no profit margins, variable future cash flows, poor liquidity, and international competitiveness.

· Why Your Boss Is Overpaid: Tim Harford’s article was an ‘aha!’ moment on how individual incentives, status hierarchies and infra-group rivalry can sabotage teams. The second ‘aha!’ moment was to grasp how the Australian Government’s recent changes to performance measures in the academic research game are likely informed by tournament theory.

· Henry Rollins’ diary entry 29th March 2008: Some very useful advice on patience and the writing craft: ‘I know a year and a half sounds like a long time and it is but not when it comes to a book. Trying to write has taught me about patience. I remember many years ago, I was living in NYC and working on Get In The Van. I had come back from practice and went back to work. My chair was a bed and my desk was a steamer trunk with a box on top of it. I was transcribing writing out of a notebook and it hit me that in a year, I would still be working on this same book. There is yet another book project that I will start preparing for second draft raking soon if I can get clear on other projects.’

· Xeper as an Operative Secret: Don Webb‘s short essay reveals the Temple of Set‘s initiatory raison d’etre: individual, self-willed becoming. He omits, but has mentioned elsewhere, one powerful psychological framework to achieve this life-orientation (Mihaly Csikzentmihalyi‘s research on creativity, flow and positive psychology) and a very good fictional example of the method and its potential results (Gully Foyle’s transformation in Alfred Bester‘s The Stars, My Destination).

· Event Arbitrage (HBS 9-208-090, 2007): Outlines a two-day M&A simulation and provides details on the market microstructure, merger announcements and transactions. Also explains how to value a ‘negative stub’ alternative investment strategy.

· Managing Learning and Knowledge at NASA and the Jet Propulsion Laboratory (JPL) (9-603-062, 2002): Summarises the lessons learnt from the Apollo moon missions, the Space Shuttle program, and the high-profile failure of several satellite missions in the mid-to-late 1990s. NASA’s KM and organisational challenges included shifting from a heavyweight, waterfall style of project management to the Faster, Better, Cheaper program; the looming retirement of senior staff with organisational memory, and technology solutions which failed because culture, team, and knowledge transfer issues were not addressed. Details a project management office solution which included a budget line item, intranet/portal development, a debriefing process for decision trees and project failures, and a leadership development program. A major outcome is NASA’s Lessons Learned Information System which parallels the US Army’s Center for Lesso
ns Learned
.

Mumbai Siege: The Hunt for the Perpetrators

Counterterrorism analysts search for answers as the official death toll from Mumbai’s siege rises to 183 people.  We now enter Susan Moeller‘s second stage of post-terrorist attacks: the hunt for the perpetrators and seeking justice.  See my October 2001 analysis here on the September 11 aftermath and Henry Rollins’ reaction in New York City.

Slate‘s Anne Applebaum observes that we don’t yet know much about the group that carried out the attacks.  Applebaum’s analysis echoes Walter Laqueur‘s ‘new terrorism’ thesis in the mid-to-late 1990s: attempts at mass casualty attacks, tactics from the guerrilla and insurgency playbook, an ideological mix, and groups that either do not claim credit or who are not on the radar of counterterrorism analysts.  Applebaum captures Gregory Treverton‘s distinction between solvable ‘puzzles’ and potentially unsolvable ‘mysteries’ in intelligence analysis.

“The particulars of the attacking group are unknown; the
political-military equation from which the group has almost certainly
arisen is not,” notes The New Yorker‘s Steve Coll.  The most plausible hypotheses for Coll and other counterterrorism experts are: (1) Pakistan’s intelligence services may have funded the group in a clandestine/proxy war with India; or (2) the group emerged as an autonomous cell that was ideologically motivated by the clandestine/proxy war.  Coll explains why at this early stage the Mumbai siege is closer to Treverton’s ‘mysteries’:

If past investigations into such groups prove to be any guide, it may
be difficult to find clear-cut evidence of direct involvement by
Pakistani intelligence or army personnel. This is because Pakistan,
knowing the stakes of getting caught red-handed, has increasingly
pursued its clandestine proxy war against India in Kashmir and on the
Indian mainland through layers and layers of self-managing and
non-state groups. The Pakistani government and its domestic Islamist
proxies, including nominally peaceful charities based in Pakistan but
with operations in Kashmir, almost certainly pass through money and
weapons on a large scale. They do so, however, in such a way that is
very difficult to trace these supplies back to the government.

Applebaum highlights the epistemological challenges that counterterrorism analysts face; Coll offers some guidance on how to conduct an investigation on the basis of ‘contingent’ beliefs and alternative hypotheses.

Pakistan’s government denies any role
in the Mumbai attacks.  Perhaps forensic analysis of crime scene
evidence will provide answers and shift the current speculation from
Treverton’s ‘mystery’ to ‘puzzle’.  Or maybe not.

The next day Coll analyses India’s claim that the group Lashkar-e-Taiba was behind the Mumbai attack.