Read Volume 96: 27th September 2015

Forum for Multidisciplinary Thinking 1 Read Volume 96: 27th September 2015

Content

Page 3: Bill James and Billy Beane Discuss Big Data in Baseball By Brian Costa

Page 8: Four Secrets To Success For Millennials By Steve Denning

Page 12: The Man Who Got No Whammies By Zachary Crockett

Page 23: Interview of Jørgen Vig Knudstorp, CEO of the LEGO Group, with THE FOCUS

Forum for Multidisciplinary Thinking 2 Read Volume 96: 27th September 2015 Bill James and Billy Beane Discuss Big Data in Baseball

By Brian Costa

The Oakland GM and the statistical wizard are two major catalysts behind the data-driven MLB—yet their paths have seldom overlapped

Updated Sept. 21, 2015 5:15 p.m. ET

Billy Beane walked up to the New York Stock Exchange on Friday morning, handed his driver’s license to a security guard and was reminded once more of his “Moneyball” fame. “You do a good job,” the guard said. “Not this year,” Beane said, with his Oakland Athletics bound for a last-place finish in the American League West. Bill James walked in just behind him, his name and face eliciting none of the same reaction.

They are two of the most influential figures in the evolution of Major League Baseball, and they are inextricably linked. The data-driven decision-making that made Beane a celebrity was rooted in the work of James, whose early writings on baseball statistics formed the foundation of modern statistical analysis. Forum for Multidisciplinary Thinking 3 Read Volume 96: 27th September 2015

But until Friday, the two of them had never actually appeared together in public. The occasion was a conference on the disruption of business models hosted by NetSuite, a software company whose board of directors includes Beane, the longtime Oakland GM.

Before appearing together at the event, Beane and James, a Boston Red Sox senior advisor, sat down with The Wall Street Journal to discuss the future of sabermetrics. Following are edited excerpts from the interview.

James: I appreciate all the things you’ve done for my career, even though you didn’t do them in my interests.

Beane: As I always said, we invented nothing. We just stole everything.

WSJ: How well do you guys actually know each other?

James: We don’t know each other well, personally. We’ve met a few times.

Beane: Just spiritual friends, I guess, in terms of the way we view the world.

WSJ: Did you ever try to hire Bill?

Beane: Well I thought I was going to work with him there for about 24 hours. In my brief 24-hour period of being with the Red Sox, Bill was on his way over there. And by the time I went back to Oakland, Bill was secured there with Boston.

WSJ: That was a time when it was still relatively unheard of for an outside analyst to be hired by a front office. Now, many of the best outside writers from places like Baseball Prospectus are being hired by front offices, where their work is proprietary. Bill, do you worry at all about sabermetrics remaining something that is strong in the public sphere, where fans will be as enlightened as front offices? Is there a potential downside for fans in that work becoming protected?

James: I suspect that the best work will always be done in the public arena. What’s done in the public arena has a million eyes on it. Somebody sees what you’ve done wrong and they figure another way to do it, and somebody else figures another way to do it. I do see sometimes work being done by the Red Sox and think, ‘I wish the public could know about that.’ But I think the best work will mostly be done in public view.

Forum for Multidisciplinary Thinking 4 Read Volume 96: 27th September 2015

Beane: Sort of an open-source?

James: Yeah.

Beane: I agree with Bill. It is self-correcting. As soon as you come up with something, you write it and you post it, you’ve got a million people in there correcting it or telling you where you’re wrong or taking it in another direction. Anytime you have an open-source situation, you’re probably going to have something better than three or four guys in a private situation.

WSJ: In the past, what was being done in the public sphere was ahead of where many front offices were. Has that changed? Do you see work being done internally that is far beyond what people have seen publicly?

Beane: I would say yes. The great thing about what’s gone on is there is a transparency to the game. It’s now a meritocracy. The best and the brightest now are part of baseball teams. It’s no longer an insider’s game where, ‘I played, therefore I inherit the position.’ To me, that’s what this last decade has busted open. The people that we’re hiring and other baseball teams are hiring, we’re competing with the Apples and the Googles of the world. I just had an intern presentation a few weeks ago from the interns we have and what they were working on. It’ll make your mind spin.

WSJ: Clearly, sabermetrics has improved the management of the game tremendously. How, if at all, has it made baseball a better game to watch?

James: I don’t know that it has, but we produce information, and information ties the fans to the game. People in a culture with no information about baseball have no interest in baseball. If you give people a little bit of information about baseball, they have a little bit of interest, and if you give them a lot of information about baseball, there’s the potential that they have a lot of interest. I’ve lived most of my life in the fans’ world and I see what I do as a fan’s activity. Granted, I work for the Red Sox. But I do know also that there are fans who go to sleep cursing my name.

Beane: It’s a different generation of fan that now has exposure and an interest in why things happen. Give them some rational reason for outcomes. We’re an information-hungry society, and one that is constantly trying to understand. I think there are a group of kids who love it for the numbers and love it for the information.

Forum for Multidisciplinary Thinking 5 Read Volume 96: 27th September 2015 WSJ: We’ve seen advances in particular areas of the game in recent years— pitch framing, defensive shifts—that are now better understood. What do you guys see as the aspect of the sport that is most in need of more research, more data and better understanding?

Beane: I’m jumping out of my chair on this one. It’s using analytics—and this sounds sort of non-field-related—but it’s injuries and medical. Even the healthcare industry is doing the same thing – trying to use big data to help solve healthcare. It’s the same in a simpler form for baseball or any sport and injuries. That’s the black swan for anyone involved in a baseball team—our injuries. Trying to predict them, minimize them, limit the downtime.

WSJ: Have you seen any progress to that end or are teams still sort of scratching their heads?

Beane: It’s a challenge because if you’re using a lot of data, there are certain restrictions on how much you can collect data [on players’ medical history], so you’re sort of straddling that line a little bit. But ultimately, I think we will make progress at some point, and the foundation of that will be analytics.

WSJ: Is there another sport that stands out to either of you as being most ripe for the kind of revolution baseball has undergone with analytics?

James: Football, from a popular perception angle, has lots of openings for analysts to rush in. There’s been this ongoing debate in football. Billy and I met in Arizona. When was that?

Beane: 2000, 2001 maybe. It was a little half-conference that Bill had and I joined him for. It was before the book.

James: The guy who put it together was a distinguished economist from the University of Chicago. One thing we talked about then, I remember, there was a guy from AT&T who studies football, and he was arguing then that it’s foolish for football coaches to punt in many situations in which they actually do punt. At that time, I was very skeptical that his research would hold up, but now there is a large community of people who argue that if you’re in the middle of the field, punting to gain 15 yards and the possession is just foolish. The percentages don’t pay off. That’s a way in which an analytical insight is probably going to significantly reshape how football is played on the field. I suspect that there are other things like that that we will see.

Forum for Multidisciplinary Thinking 6 Read Volume 96: 27th September 2015 WSJ: Billy, you’ve been on a number of corporate boards, and you’re now an advisor to a soccer team in Holland. Is there a dream job for you beyond the one you have now?

Beane: Privately. Listen, I love what I do. I’m one of 30 people who have an amazing job that kids dream of and amazing people around me. I certainly have some interests. You mentioned soccer, European football. My first draw to it was the emotion. [The English Football Association] and professional baseball leagues started about the same time. The older they are, probably the better opportunities there are because they’re ingrained. I’ve always thought the most progressive sports leagues in the states were the newer ones. Specifically as to what that would be, I probably had better keep that to myself.

WSJ: If I guessed soccer GM, would I be in the ballpark?

Beane: I don’t think they call them GMs there. It’s an interest of mine, yeah, but it’s been for a long time. I’ve got plenty of work to do in Oakland right now.

WSJ: Bill, is there anything else you’d like to do professionally?

James: Most successful people I know are people who plan and have a career path in mind. I, on the other hand, just take the opportunities that are rolled at me. I’ve never had any plan to get where I am. I’m like the horse with the blinders. I just keep walking forward, and people feed me carrots.

Beane: Is that all I would have had to pay you, carrots? I would have had you in Oakland a long time ago.

Source: wsj.com

Forum for Multidisciplinary Thinking 7 Read Volume 96: 27th September 2015 Four Secrets To Success For Millennials

By Steve Denning

This is a guest post by the daughter of Steve Denning, Stephanie Denning, who writes about leadership issues from a Millennial perspective. The views expressed here are her own.

Have you ever wondered: If only I were as successful as say, Warren Buffett, I would be a happy person, I would be content?

So have I.

I don’t know why, because I rationally know it isn’t true. That there are many variables that influence happiness. But we are a culture that conflates happiness and success.

The problem with this thinking is we are actively setting ourselves up to fail. Success isn’t so simple. Anyone who has spent any time in the real world already knows this.

One popular myth floating around about success is that 10,000 hours of deliberate practice is what it takes to develop expertise. We like this idea, it makes it seem like success is just within reach. If you work hard, you will succeed.

Unfortunately, success is a lot more random than we’d like to think. Success is part work, part luck.

Hard work we understand, but luck is a hard concept to wrap our heads around. And it had never really been quite clear to me how much of our success is driven by hard work versus luck. Until I stumbled upon Michael Mauboussin’s marvelous book The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing (2012: Harvard Business Press).

1. Not all skills are created equal

In my first job I watched in awe as one of the smartest people in the company got fired. I suspect its because he just didn’t fit into the company culture. If hard work was the only driver of skill, these stories would cease to exist.

Forum for Multidisciplinary Thinking 8 Read Volume 96: 27th September 2015 “Deliberate practice is powerful in domains where it applies, including chess, music, and sports,” Mauboussin writes. “But acknowledging its limits is crucial. A number of the popular books that celebrate deliberate practice fail to distinguish between when it works and when it doesn’t.”

Mauboussin offers a continuum that looks a little something like this:

Mauboussin explains: “At the right side of the continuum, the key to improvement is deliberate practice.”

The reality is that very few jobs fall on the right of the spectrum. In my own experience, I’ve come to believe every job has an invisible bar of competency. Beyond this bar, any additional expertise you gain will have diminishing returns., Interestingly, I’ve realized that that threshold is often a lot lower than I ever expect.

2. Your environment can make or break you

“When we observe the success of others,” Mauboussin explains, “we fall victim to the fundamental attribution error. In this context, the error is the tendency to base our explanation of what happens on an individual’s skill rather than the situation.” An individual’s success is most often attributed to the individual; rarely do we assign their success to the environment or system they are in.

You are carried by the success (and failure) of your environment.

The influence of your environment doesn’t stop there. Your environment subconsciously influences your definition of success. Here’s an example: Forum for Multidisciplinary Thinking 9 Read Volume 96: 27th September 2015

I went to college in New York where success was defined by getting a job in finance. Going into college I had no clue what finance even meant, nor any initial interest in it, but it didn’t take long to assimilate that success in school was synonymous with finding a job in finance. I also happened to graduate in 2009. You would think graduating college during the Great Recession would prompt us to shun the world of finance. But instead we embraced it. The finance jobs were far more scarce, which made them all the more enviable.

It is human nature to absorb your environment’s definition of success. But I can attest from my own experience, you’ll only going in circles if you only follow everyone else’s definition of success.

3. The butterfly effect is a real thing

When most college grads are let loose into the wild after graduation, we are told we can do anything. Beware: Your first job out of college will impact the subsequent choices that present themselves to you. Mauboussin explains in The Success Equation: “A path-dependent process is one in which what happens next depends on what happened before. It’s a process that, in effect, has memory.”

Career choices are interdependent. Where you begin influences where you end up. I have one friend who’s trying to make the leap from a 100-hour- week-job at Goldman Sachs to a startup. He’s been at it for a year now. He has spent all of his vacation time on interviews with startups like AirBnB and the likes. Recently, he was flown out for a final interview only to learn they passed on giving him an offer. The feedback they give every time is he doesn’t have enough startup experience. Our history follows us around like baggage, whether we want it or not.

4. Your brain is a “baloney-generator”

Here is one of Mauboussin’s most interesting points: “One of the left hemisphere’s main jobs is to make sense of the world by finding a cause for every effect, even if the cause is nonsensical. […] Once we know the ending, we stand ready to create a narrative to explain how and why events unfolded as they did.”

Steven Pinker, preeminent Harvard psychologist, aptly named the part of your brain responsible for this mechanism as your brain’s Baloney-Generator.

Forum for Multidisciplinary Thinking 10 Read Volume 96: 27th September 2015 It is eerie to think that our brain might ever be mistaken.

Kahneman and Tversky, the de facto psychologists today on biases, explain that because these biases happen automatically, it is very difficult for us to have any control over the process.

Another psychologist, Duncan Watts, makes the same point: “Common sense is extremely good at making the world seem sensible, quickly absorbing even the greatest surprises into a coherent-seeming world view.”

The takeaway: You have as much of a right to succeed as anybody else.

We constantly want to interpret success as having clear drivers. We study successful people thinking we can glean some insight into their success. Our brains are wired to identify cause and effect.

The problem is, as Mauboussin writes, “Attributing success to any strategy may be wrong simply because you’re sampling only the winners.”

Here’s what I’ve learned: Don’t be daunted by the people who have succeeded. (And don’t evangelize them either.) You have as much of a right to succeed as anybody else.

Source: forbes.com

Forum for Multidisciplinary Thinking 11 Read Volume 96: 27th September 2015 The Man Who Got No Whammies

By Zachary Crockett , Sept 14, 2015

"Something was very wrong. Here was this guy from nowhere, and he kept going around the board and hitting the bonus boxes every time. It was bedlam, I can tell you. And we couldn't stop this guy."

~ Michael Brockman, head of the CBS daytime programming department, 1984

On May 19, 1984, before a live studio audience for the game show Press Your Luck, a squirrely-looking, gray-bearded 35-year-old named Michael Larson leapt from behind his podium and squealed with joy.

For the contestant, the show’s catchphrase, “Big bucks, big bucks, no Whammies!”, had just come to fruition: in an era where no single contestant ever won more than $40,000 — not even those competing on the ever- popular The Price In Right, or Wheel of Fortune — Larson had earned $110,237 ($253,000 in 2015 dollars).

And in achieving this, he’d overcome insurmountable odds...or had he?

While CBS executives in the control looked on in horror and disbelief, Larson harbored a secret: he’d cracked the code of Press Your Luck. For months, he’d studied the show’s game board, which lit up squares in a supposedly “random” sequence, and found that, in actuality, it was repeating the same 5 patterns over and over again.

Forum for Multidisciplinary Thinking 12 Read Volume 96: 27th September 2015 What ensued was one of daytime television’s strangest moments — one that exposed the follies of both man and technology.

Press Your Luck: The Titanic of Game Shows

In September of 1983, a flashy new game show called Press Your Luck hit the daytime broadcast on CBS.

The brainchild of two veteran television producers, it was billed as the most “technologically advanced” program of its kind; utilizing cutting-edge audio- visual equipment, it tempted viewers and contestants with enticingly large payouts.

As far as rules and structure go, Press Your Luck was pretty straightforward. Each episode began with the show’s host, Peter Tomarken, asking the three contestants a series of multiple choice questions. Whoever buzzed first and answered correctly earned three “spins” on the “Big Board,” the prized centerpiece of the game show:

This Big Board was made up of 18 backlit squares, each containing a constant rotation of various cash and item prizes, as well as a selection called a “Whammy.” When a player’s spin began, a selector light rapidly bounced around the squares, lighting them up in a seemingly random sequence; the player would then choose when to slam down a big red button, stopping the Forum for Multidisciplinary Thinking 13 Read Volume 96: 27th September 2015 board. Whichever square was lit up dictated the player’s fate for that spin. At the end of each spin, the player either had the option to “press his/her luck” (spin again) or pass any remaining spins to the next player.

The board contained a wide array of outcomes: cash amounts ranging from $500-$,5000, vacation packages, material prizes (boats, appliances, etc.), “Pick a Corner” (in which the contestant would select any corner square on the board), various instructions (“Go Back 2,” “Move 1”), and finally, the Whammy. If a player landed on this dreaded tile, an annoying animated gremlin in a red suit would come out and reap the player of every cent he/she had amassed.

Many of the cash prize squares on the board also contained an extra spin (+S). Hypothetically, this made it possible for a player to continue on indefinitely, assuming he/she consistently landed on the cash+spin squares — though the show had made certain that the odds of this occurring were nearly impossible.

Of the Big Board’s 54 outcomes (18 squares with 3 rotating options each), 9 were a “Whammy.” That meant that, on any given spin, a player had 1 in 6 odds of losing everything. What’s more, the team that had programmed the board was confident that both the speed and “random” nature of its sequences would prevent contestants from winning more than $25,000. Over the first few episodes, the average winnings hovered around $14,000.

In the words of former CBS executive Ron Schwab, Press Your Luck was “like the Titanic — it was the technological marvel of its time.” Unfortunately for CBS, and iceberg loomed, and its name was Michael Larson.

The Game Show Hustler

Michael Larson was never interested in following the rules.

Forum for Multidisciplinary Thinking 14 Read Volume 96: 27th September 2015 The youngest of four boys, he was born in 1949, somewhere between Cincinnati and Dayton, Ohio. By middle school, he’d established a lucrative enterprise smuggling candy bars into his gym class and selling them at a considerable mark-up. While tenacious and intelligent, he was always looking for a quick, easy way to get rich.

“He didn’t understand the value of good, hard, honest work,” his older brother, James, later bemoaned. “He thought those people were fools.”

Instead, Larson invested great amounts of time seeking out loopholes and taking advantage of them, often illegally. In one instance, he found a bank that gave out $500 for starting a new checking fund; using fake names, he opened dozens of accounts, waited the minimum necessary duration, then withdrew the money. On another occasion, he registered a business under a family member’s name, hired himself as an employee, then fired himself to collect unemployment benefits.

Throughout his 20s and 30s, Larson only intermittently found real work — first as an air conditioner mechanic, and later, an ice cream truck driver — all the while graduating to more intensive ploys. He began to spend every waking minute in front of a television, watching infomercials and game shows, in hopes of identifying some kind of opportunity to get rich quick.

“He had an entire wall of 25-inch televisions stacked one on top of the other,” recalled his then-girlfriend, Teresa Dinwitty. “He watched them all at once, and it got so hot, the paint peeled off the wall.”

After determining that more popular daytime game shows like The Price Is Right and Wheel of Fortune were un-hackable, Larson began to focus on a relative newcomer: Press Your Luck.

Using his VCR, he recorded episodes; for 18 hours a day, he sat perched in front of the screens, analyzing every spin of the Big Board frame-by-frame, looking for patterns.

Then, incredibly, he found one.

After six months of scrupulous examination, Larson realized that the “random” sequences on Press Your Luck’s Big Board weren’t random at all, but rather five looping patterns that would always jump between the same squares. He wrote down these patterns, memorized them, then honed his timing by

Forum for Multidisciplinary Thinking 15 Read Volume 96: 27th September 2015 watching re-runs and hitting “pause” on his VCR remote when he suspected the board would land on a given square.

Most crucially, Larson determined that two squares on the game board, #4 and #8, always contained a combination of cash and an extra spin. Since he’d memorized the patterns, he knew exactly when the board would land on each square:

Larson analyzed the board and found that each of its 18 squares contained three rotating options (54 total); then, he found that squares 4 and 8 always offered a cash prize with an extra spin (and never contained a dreaded Whammy):

Forum for Multidisciplinary Thinking 16 Read Volume 96: 27th September 2015

Larson was ecstatic. He’d uncovered a flaw in the game, perfected his technique, and, in his opinion, possessed the ability to amass a fortune. There was just one thing left to do: he had to finagle his way onto the show.

Armed with little more than the address of CBS Television City, Larson spend the last of his ailing funds on a bus ticket from Ohio to Los Angeles, with the intention of auditioning for Press Your Luck.

Bobby Edwards, the show’s contestant supervisor, remembers feeling uneasy when Larson strutted into the audition room:

“We held daily auditions: one in the morning, and one in the afternoon, maybe 50 people in each session. [Larson] walked up right off the street, and told us he was an ice cream man from Ohio...There was something about him that I just didn’t believe. I didn’t trust him.”

Forum for Multidisciplinary Thinking 17 Read Volume 96: 27th September 2015 Despite Edwards’ doubts, Larson, an ever-enterprising schmoozer, managed to convince Bill Carruthers, the show’s executive producer, that he was a small-town plebeian desperately in need of a chance to win some money. Always in search of a good sob story, the network agreed: Larson was slotted to appear on the fifth taping of the day, May 19, 1984.

Michael Larson Presses His Luck

On the day of filming, Larson arrived early. Dressed in a cheap suit jacket and a shirt he’d bought for 65 cents at a thrift store, he exuded the intense confidence of a man preparing to go into battle. His competitors, Ed Long (a Baptist minister) and Janie Litras (a dental assistant), were completely oblivious to their impending doom.

When the show’s host, Peter Tomarken, asked Larson what he did for a living, his response was self-assured: “I drive an ice cream truck in the summer and I hope to win enough money today not to have to do that.”

Larson got off to a rocky start. On the very first question ("You've probably got President Franklin D. Roosevelt in your pocket or purse right now, because his likeness is on the head side"), he buzzed prematurely and yelled, “$50 bill!” (the correct answer was, of course “a dime”). For the remainder of the question round, he sat silently, with a perplexed look on his face. Eventually, he finished with 3 spins, putting him in last place behind Long’s 4 and Litras’ 10.

Since he’d come in last, the rules dictated that Larson spin first. This did not go well: on his very first spin of the board, he hit a Whammy. However, he quickly recovered: hovering his hands just above the buzzer, he intently watched the light travel around the board, and, recognizing the patterns, hit square #4 ($1,250) on his second and third spins.

Still, at the end of round one, Larson sat in last place, with $2,500:

Forum for Multidisciplinary Thinking 18 Read Volume 96: 27th September 2015 In round two, Larson came to life.

During the second question round, he managed to correctly answer three questions, bumping his total spins up to 7; since he sat in last place, he again spun first.

With his first two spins, he landed on square #4, earning him $4,000, and $5,000. Then, over 10 ensuing spins, he proceeded to rack up $29,351 in winnings without hitting a Whammy. The audience roared with excitement, yet Larson seemed unsure of himself. While he was aiming to hit squares #4 and #8, he missed his mark four times during this period of play, unintentionally landing on #7 (a trip to Kauai), #17 (#700 + a spin), #6 ($2,250), and #7 again (this time, a sailboat).

After the sailboat, with 4 spins remaining, he locked into what industry execs have since deemed to be one of the "most absurd grooves" in game show history. Over the course of 31 consecutive spins, he persistently nailed squares #4 and #8; astonishingly, 20 of them were $1,000 or higher:

During Larson’s rally, Tomarken, the show’s host, grew increasingly nervous. His quips graduated from shock (“We’ve never seen this happen! You’re on a roll!”) to disbelief (“This is unreal”), to utter disgust (“You’ve got to be kidding me”) — and once Larson hit the $30,000 mark, he started pressuring the contestant to bow out. Forum for Multidisciplinary Thinking 19 Read Volume 96: 27th September 2015

“Michael, you really are PRESSING YOUR LUCK,” he warned at one point, wagging a finger in the air. “After this show, you’re going to get a special call from the president of CBS…”

Finally, 40 successful spins and $102,851 later, Larson passed his final 3 spins to Ed Long, fearing that he was beginning to lose focus. On his very first spin, Long hit a Whammy and lost all of his cash. When the spins were passed to Litras, she too hit a Whammy on her first try. In the hopes that Larson would screw up and lose his cash, she then passed the spins back to him, but Larson did not falter. Instead, he landed $4,750 and a trip to the Bahamas.

When the game ended, Larson raised his arms in triumph and emitted a primal scream: he had secured $104,950 in cash, a sailboat ($1,015), and two all-inclusive trips, which brought his total winnings to $110,237. Ed Long distantly trailed in second place with $11,516 (which he'd earned in a prior episode as a returning champion), and Janie Litras left with $0.

Larson had made a fool of CBS: He'd spun the show's board 47 times. He’d won more than any other daytime game show contestant in history. And he’d done so by finding an inherent flaw in television’s most “technologically impressive” game board.

***

While Larson celebrated on stage, the powers that be at CBS sat dumbfounded and deflated.

“I wasn’t there that day, but boy did I hear about it,” Bob Boden, a former executive at CBS Daytime Programming, later told TVLand. “It went through the hallways of CBS like a rocket.”

Darlene Lieblich Tipton was in the Press Your Luck control room that day. As a CBS employee, it was her job to ensure that contestants were playing by the rules. In an interview with This American Life, she recalled the mounting tension backstage:

“It wasn’t unusual for contestants to go on streaks. It was kind of the way the game was designed. But after about 10 spins of the board, it started to become obvious that he was hitting same prize in same square every time. And that’s skill — it’s not random, and it’s not luck. He could aim and hit,

Forum for Multidisciplinary Thinking 20 Read Volume 96: 27th September 2015 which we didn’t think was possible. First, the booth got very quiet, then there was an, ‘OH MY GOD, OH MY GOD, OH MY GOD, what do we do?!’ People were turning to me saying, ‘Can we stop this?’” Statistically, it was extremely unlikely that Larson had simply gotten lucky. Given the 1 in 6 odds of hitting a “Whammy,” the probability of going 45 spins in a row without hitting one was (5/6)^45, or .027%. Larson had beat odds of roughly 3 out of 10,000.

Despite this, Tipton saw nothing illegal in Larson’s play: he wasn’t visibly breaking any rules, and she could do nothing but helplessly stand by and watch him dominate the show.

The following day, CBS launched a full out investigation. Nearly every department head at the network gathered in a musty room and reviewed the tape frame-by-frame — just as Larson had done on his VCR with Press Your Luck episodes. However, even after this review, they could find no faults in his method. “He fit every criteria,” one executive told GSN. “He had not broken any rules of the game, he had played fairly, and he was an eligible contestant. We paid him his money...he was simply smarter than CBS.”

After Larson’s win, the “Big Board” was re-programmed: its 5 “random” patterns were expanded to 32, and the control panel was replaced by a PC running a far superior randomizer. Larson's streak had gone on so long that CBS had to split the airing into two half-hour segments; the network was so thoroughly embarrassed by the board's flaw that they only aired the episodes once.

In September of 1986, just two years after Larson's Press Your Luck appearance, the show was cancelled.

The Champion’s Downfall

Newly minted with around $90,000 in post-tax earnings, Larson initially indicated that he was ready to turn his life around and be more responsible. “I tried to get him to look at some reasonable investments,” his brother, James, told a reporter. “He put it in the bank...and for some time, was doing the right thing.”

But a few months later, while listening to the radio, Larson heard about a contest he just couldn’t resist: the show read a serial number on air every day, and if a listener could match that number to a $1 bill, he would win $30,000.

Forum for Multidisciplinary Thinking 21 Read Volume 96: 27th September 2015

Larson visited five different banks, withdrawing nearly $50,000 in $1 bills. Then, over the course of two weeks, he analyzed every bill in hopes of winning. A match never came, and Larson, who’d grown lazy by then, resolved to just leave the bills in his home. This didn’t work out too well: one night, he left to Christmas party and came home to a kicked-in back door. All the money was gone.

This was the beginning of Larson’s downward spiral. Teresa Dinwitty, then Larson’s common-law wife, recalls then that aggression mounted to such a level that she feared for her life. She fled with her children and demanded Larson leave her house.

Eventually, Larson moved to Dayton, Ohio, where he assumed a role as an assistant manager at Walmart, but this didn’t last long. He grew disillusioned with his minimal pay and, after meeting another woman, launched his next venture: a massive Ponzi scheme. Under the name “Pleasure Time Incorporated,” Larson sold shares in a non-existent American-Indian Lottery, and, by the mid-1990s, he’d managed to cheat 20,000 investors out of $3 million. With the SEC, IRS, and FBI hot on his tail, he fled Ohio and disappeared into the void.

When investigators finally tracked Larson to Apopka, Florida in 1999, he’d succumbed to throat cancer.

***

“Winning that game show was the start of [Michael’s] downfall,” Larson’s brother, James, would later say. “It made him think he could trick anybody, and do just about anything he pleased.”

But it was also a feat that brought out the best in a man who was otherwise a delinquent: Recognizing the board’s flaws required keen observation skills. Mastering the timing of the generator took a unique combination of patience, dedication, and can-do mentality. And performing under pressure in front of a live studio audience demanded a special breed of composure.

In many ways, “gaming” Press Your Luck was the most honest endeavor Michael Larson ever undertook.

Source: http://priceonomics.com

Forum for Multidisciplinary Thinking 22 Read Volume 96: 27th September 2015

Interview of Jørgen Vig Knudstorp, CEO of the LEGO Group, with THE FOCUS

The LEGO Group, the world’s most renowned toy company and arguably the world’s most famous brand, has been providing children with a source of fun and wonder for 83 years now. Founded by a Danish carpenter in the midst of the Great Depression, the company has gone from manufacturing wooden toys to producing a whole array of plastic construction toys, based on the famous interlocking bricks. Jørgen Vig Knudstorp, CEO since 2004, talks with THE FOCUS about the family-owned business, the soul of the company and his own unique personal trajectory.

THE FOCUS: Under your leadership, over the past decade the LEGO Group has gone from the brink of insolvency to being the world’s most successful toy company, with record sales and profits. Only yesterday, your company announced 15 percent global sales growth year-on-year (DKK 28.6 billion). How do you feel about this?

Jørgen Vig Knudstorp: I feel very proud and also very privileged. I don’t think many CEOs get ten consecutive years of pure organic growth. I also feel extremely humble because this shows us the global strength and appeal of the brand.

Forum for Multidisciplinary Thinking 23 Read Volume 96: 27th September 2015 What’s the secret x factor?

I think the x factor relates to the fundamental question of “Why do we exist?” Too many companies have a poor answer for that, or, at best, a complex one. The LEGO Group has a very simple answer. We strongly believe that play is vital for a child’s development, just as food, love and good health are. So we exist to make a material that no one else can make so well, something that sticks firmly together but is pliable enough for a two-year-old to take apart. And we’ve transformed this very simple idea into an integrated global business system and optimized it.

How do you resist complacency to keep your corporate culture alive?

Every year we throw away the trophies, we throw away any sense of self- congratulation, and we start all over again. We ask ourselves: “How can we make the LEGO playing material we put in children’s hands even more exciting?” The answer to that is by re-inventing ourselves every year and then executing the system again.

I feel a huge urgency to constantly be raising our game. One way of doing that is to focus less on our financial performance and more on how motivated and creative our employees feel and, of course, how our retail customers feel. To what extent are children putting our products at the top of their wish lists and talking to their friends about playing with LEGO? Which leads us to a broader question: “What kind of reputation do we have? Are we a trusted company?” Because if we are trusted by the public, children recommend our products to other children, and our employees feel engaged, we are sure to succeed. So it’s by thinking in these terms that we remove the complacency and keep our corporate culture alive.

When you assumed the position of CEO in very difficult times, you said that the LEGO Group had lost its soul. What exactly had been lost and how would you describe the soul of the company today?

There are several different elements. One of them I already mentioned – the belief in play as a vital part of a child’s development. Then we have an owner who says: “What I really care about is the product – and children’s development.” So while we need to make money, the LEGO Group has a deeper purpose than that. Our purpose is to make a difference in children’s lives by giving them wonderful play experiences, and bringing this experience to every child on the planet. Money is like oxygen to a body, but none of us sit in this room to breathe the air; we sit in this room to fulfill a purpose with our

Forum for Multidisciplinary Thinking 24 Read Volume 96: 27th September 2015 lives. Making money is the entry ticket to fulfilling that purpose. In the past we had “religious” people, if you like, who believed in the purpose of what we did, but we also had “realists” who saw this purely as a business. I wanted to combine the two in individuals – people who could succeed in the marketplace and also reflect the spirit, purpose and energy of the company. This goes to the soul of our company.

“The job defines my life. I have my family at home and my family here at LEGO, and that’s where I spend all my time.”

So maybe the soul of your company reflects the sense of wonder that comes naturally to children …

We know from neuroscience that children are naturally curious, creative and imaginative, attributes we tend to lose as adults. So we teach children essential skills like executive functioning – how to manage themselves and their resources – and spatial awareness. We help them learn to think systematically, scientifically and with a sense of structure. That’s why Google’s co-founder Larry Page said that LEGO bricks constituted the most important technology he’d ever encountered. By learning to build anything out of a simple material, children can combine rightbrain creativity, storytelling and design thinking with left-brain scientific structure and logical analysis. For me that’s where the soul of the company begins.

How has the identity of the LEGO Group changed over the past ten years?

It has changed a lot. We used to be seen as a bit of a basket case. Our competitors were ten years ahead of us. Now we’ve passed them. We’ve redefined the industry benchmark by learning, in part, from other industries. Globalization and digitization have fundamentally changed the face of business and of the LEGO Group in particular. We have taken a very global approach to branding, product, processes, operations and HR, so that we’re now the most trusted brand in North America and the number two in Europe. Also the issue of responsibility and sustainability has helped shape us, because this is intrinsically related to trust and authenticity. When I look back at those crisis years I think it was actually our failure to globalize and digitize fast enough that held us back. In our own industry we are now leading the way in both digitization and globalization.

How does digitization fit in with your back-to-basics focus on the brick as the LEGO Group’s premium product?

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It is still all about the brick. If the LEGO Group defines itself as a purely digital player, then we’re just another fish in the ocean. But if we can combine bricks and digitization in new ways, that’s what we will do – uniquely.

The combination of physical and digital play has been tried in the past without much success. What makes you think it can succeed?

The vital question here is: Do children want to play physically in the future? I’m one hundred percent convinced they do. If human beings don’t move about, their brains simply stop growing. Children can’t sit still in school because their brains are telling them to move. In terms of the purely digital space we know now that the most successful and popular online game ever created is a game where people appear to be building with LEGO bricks. So is there a meaningful combination here? I think there is. Gutenberg helped establish a revolution 600 years ago with the printing press. Today, it’s all about creative coding, which is not unlike building with LEGO bricks. And the LEGO Group is helping to pioneer systems that allow people to view coding as putting bricks together on a screen.

How do you ensure that your 14,000 employees on three continents share the same passion for education and play?

As companies like ours continue to penetrate global markets we face a fundamental choice: Either we stay together as an integrated and unified whole or we divisionalize. We wanted to stay together as one company because we think we are one of those brands like Apple or Audi, where the product is much the same in every geography. We’re not trying to be the best local competitor, rather the best global competitor. That’s the fundamental strategic choice and from that choice follows an organizational model of global integration. This requires leaders who can think like CEOs at the top level, because they need to see the full context. They don’t just manage their piece of their world. They see that they’re part of a whole.

What qualities do you look for in your leaders to take you in this direction?

They need to understand that they work in a system with very high interdependency. So, if you as an individual seek to be independent, you’ll struggle in this system because you’re highly dependent and you need to recognize that interdependency and thrive on it. So you need to be a person who values synergy. You need to be able to listen to others and integrate their

Forum for Multidisciplinary Thinking 26 Read Volume 96: 27th September 2015 perspectives, but also to be confident enough to state your own position. You need to be what some people call an integrative thinker. It’s a very tough call for a leader who may be accustomed to a different system.

What are the non-negotiable parts of your organizational culture?

What is non-negotiable is people who are willing to deal with the complexities of globalization and the interdependencies that follow from that. They need to be collaborative. They need to stick together as a group. They need to be willing to scale fast and be adaptable, because that’s how this company survives. And last but not least they must live the LEGO culture and spirit through their everyday working lives.

In building the LEGO Group of the future, how does diversity help deliver on your objectives?

Diversity is extremely important for two reasons: One is seeking globalization while having our roots and culture firmly based in Denmark. Because obviously if you want to succeed in a number of countries where you don’t understand the culture, you don’t speak the language, you can’t read the newspapers or the Internet, then you need more diversity in the workforce. But also when you run a coherent integrated system you need to respect functional diversity where no function is more important than any other. A professor of globalization at IMD once told me that “the most difficult diversity to introduce in any leadership is gender diversity, and if you succeed with gender diversity, it is also easier to handle other types of diversity.” So we’ve worked very hard on that over the last three years and we’ve actually made very good progress. If you want this system of integrative thinking to work, you need to be able to see things differently so you can synergize.

“If you come in as a non-family CEO and you’re not willing to listen, you will get into trouble fast.”

The LEGO Group is still family-owned. Family firms seem to be characterized by a powerful corporate ethos, a “family gravity” that can make life hard for a non-family CEO. How do you deal with that?

Family firms potentially have special advantages that relate to the authenticity of their value statement. Because when you have an owner who is active, everybody knows that what the owner wants is what really matters. You speak with more authenticity as an owner. So when I talk to my staff I often liken our situation to Denmark where we have purportedly the oldest

Forum for Multidisciplinary Thinking 27 Read Volume 96: 27th September 2015 monarchy in the world, but a constitutionally elected government as well. The King and Queen are the owners, whereas governments come and go.

To take up that metaphor, do the monarchy and the people have faith in their elected government?

In my case I think I was chosen for the job because our fundamental values align very well. I’ve become like a spokesperson for the family and sometimes join with the family to articulate where the future of the family ownership lies. So it’s a very symbiotic relationship. And that’s what I think you need to buy into as CEO of a family-owned business, the fact that families are not ordinary shareholders. They are not always primarily concerned with the traditional notion of shareholder value. What really matters might not be a financial question, it might be other less tangible things. So if you come in as a nonfamily CEO and you’re not willing to listen, or you come in saying: “Well, I’ve read the book of good corporate governance and I want to be independent from the dominant shareholder,” you will get into trouble fast. If, on the other hand, you can enter a dialogue with – or even challenge – the owning family, while at the same time being a good representative for the company, which is what the owners want, then you can have a wonderful interaction and leverage a lot of advantages from family ownership.

You spoke earlier about purpose as a core asset of the LEGO Group. How much of this is due to being a familyowned company?

I think there’s a unique spirit here thanks to family ownership, not least because of the long-term approach this implies. In our case, the family continues to be willing to take a very long-term view on certain decisions. Their view is: “Well, if we need to invest in something because we believe it’s essential for our long-term future, we will just do it because we think it is the right thing to do.”

What is also important in a family-owned company is to respect the elected management team and in my case, again, I’ve been extremely fortunate that I took over from a family member – Kjeld Kirk Kristiansen – who was secure enough in himself not to spend the next ten years of his life trying to argue why he didn’t do anything wrong. Quite the opposite. He called me only last night, exuberant, saying: “Congratulations on everything you have achieved.” And I’m thinking: “It’s actually of your making. You invented the whole thing.”

Forum for Multidisciplinary Thinking 28 Read Volume 96: 27th September 2015 So that is also something a family owner needs to think about: How do they give the team that they bring in the room they need to actually run the business in the best possible way? It’s delicate but I think in our case we’ve landed in a very good place.

You’ve been CEO for ten years. How do you stay motivated?

For me the motivation most days is that I’m thinking: “I should pay to be in this job.” There are so many fun moments with fans and children, plus I love the global aspect of the job – meeting people from many different cultures, going deep into China, for example, and visiting a household to see how it plays. That’s just supermotivating. The intellectual, organizational and leadership challenge is huge. But it’s also my relationship with the owner. I don’t waste a second of my day thinking about whether I’m trusted. I don’t feel that people are suspicious of me. I feel like I have a genuine personal relationship with all of my reports. I just brought in some new members in my management team and some younger people who help us function on a daily basis. They’ve come from other big global corporations, and they say: “Wow, I’ve never seen a management team that works together like this. It looks like you’re friends!” And that just makes for a tremendously satisfying daily personal environment.

And how have you changed personally over the past decade?

I think I’ve grown up in this job. There were a lot of things I was naive about and didn’t see when I first arrived. I also realize how much of a life-choice this has been. When I started I was thinking: “I’ll be lucky if I survive here for three years, but I’ll learn a lot; then I’ll work out what to do with the rest of my life.” Now, of course, the job defines my life. This is what I’ll be known for. It has certain consequences in terms of what you can – and what you cannot – do. I have my family at home and my family here at the LEGO Group, and that’s where I spend all my time. So don’t talk to me about soccer results or playing golf because I don’t have any outside hobbies. There’s just no time. And that has changed me, because that is not where I thought I would be at the age of 46.

The next question has to be: Where did you think you would be at the age of 46?

(Laughs) I had many crazy dreams. When I was a child or a young man, I wanted to be an astronaut, and I famously said to my family: “If I can be the first to go to Jupiter and never return, I’ll do it!” Then I wanted to become a

Forum for Multidisciplinary Thinking 29 Read Volume 96: 27th September 2015 movie director because I love movies. And when I finally left university almost at the age of 30, I wanted to pursue an academic career. I loved the learning, the intellectual curiosity, and I loved teaching. Students would crowd my lectures and seek me out. I still hear from many of them and the careers they pursued afterwards. And then I went into management consulting and found out that I was not an analyst, I was a people leader. So I ended up at the LEGO Group – because I loved playing with LEGO as a child – and here I found out I was a business leader. So if you ask me about discovering your purpose in life, I’d say you don’t really know what it is until you’re there.

You’re also known to have recommended the work of the Danish philosopher Søren Kierkegaard to your students. What were the key lessons?

Well, there are many. For example I spoke about his insight that if you think you haven’t chosen a path, you already have chosen a path. I believe that’s one of the big things – that not making a choice is also making a choice and you’d better be very conscious of that.

Kierkegaard also spoke about three stages of human existence: the aesthetic stage, the ethical stage and the religious stage. The aesthetic stage is not about being aesthetic, it’s about pursuing pleasure and avoiding commitment. It’s about being hedonistic, egotistical and fragmented. The aesthetic stage then gives way to the ethical stage, which is about sense of duty, of working for family and society, of making firm commitments and showing a capacity for self-examination. The religious stage is about faith in one’s true purpose and a response to a higher calling, to God if you like. I think when you look at a business, or you look at a person, we can modernize Kierkegaard a little and speak of four dimensions: The physical, the social, the mental, and the spiritual.

How do these dimensions relate to the world of business? What were you trying to tell your students?

For a company the physical is – in Kierkegaard’s terms – the aesthetic: It’s the animal in all of us, the unreflective part, and in a company this is the financial performance. The social dimension in a company is its culture. It’s about the relationships that are fostered within the corporate culture. How we get along with each other? Do we trust each other? Do we speak openly? Do we give each other room? This is very important because this is our family, these are our friends. That’s what Kierkegaard would call your ethical life.

Forum for Multidisciplinary Thinking 30 Read Volume 96: 27th September 2015 The mental dimension in a company is its capabilities. In a person, it’s your intellectual life: “How do you think about issues?” Finally, the spiritual translates into what Kierkegaard called the religious dimension, which is: “What do you believe in? That’s a company’s purpose. What’s your direction? How do you scrutinize your own actions and take responsibility? What is your higher calling?”

We all have these dimensions inside ourselves and students of business need to see themselves in this multi-dimensional away. If they only see themselves as a finance person they’re not going to be successful in business because they’re not a whole human being.

You talked about making choices that defined you. After ten years as a business leader, what choices will you be making for your own future in the next decade?

I think the journey that the company’s owner and employees are on is so long that the agenda is already set out. Making the LEGO Group a truly global leading player in the business of play, and at the same time integrating and fully digitizing the business system to expand the purpose of the LEGO brick … that’s what I’m going to be doing for the next ten years.

The interview with Jørgen Knudstorp in Billund was conducted by Wan May Ang, Egon Zehnder, Singapore, and Morten Tveit, Egon Zehnder, Oslo.

Jørgen Vig Knudstorp Born in Frederica, Denmark in 1968, Jørgen Vig Knudstorp studied Economics and East Asian Studies at Aarhus University before gaining an MBA in the UK and his doctorate from MIT in Cambridge, Massachusetts. He began his career in 1998 with McKinsey and, three years later, joined the Strategy Department at the LEGO Group. In 2004, at the age of 35, he was appointed CEO of the company. Known for his modesty and playful nature, Knudstorp learnt early on how to listen to children when he worked part-time in a nursery school. Today he has four children aged between 7 and 12, two boys and two girls, whom he describes as his own “personal market research team.”

The LEGO Group The LEGO Group was founded in 1932 as a manufacturer of wooden toys by Ole Kirk Christiansen, a carpenter from Billund, Denmark. The LEGO brick was first patented in 1958 and caught the imagination of children and adults alike. After 70 years of virtually uninterrupted success, in 2003 the company

Forum for Multidisciplinary Thinking 31 Read Volume 96: 27th September 2015 began to slide towards bankruptcy after trying to ride the growing wave of computer games. In a bold move, Kjeld Kirk Kristiansen, the grandson of the founder, stepped down in 2004 and appointed Jørgen Vig Knudstorp as the second non-family CEO. Over the ensuing decade, Knudstorp refocused the company on its core business – the colored bricks and the imaginary world they create – resulting in a rapid return to growth. Today the LEGO Group is the world’s second-largest toy company in terms of sales and in 2014 manufactured more than 60 billion LEGO bricks.

Source: http://www.egonzehnder.com/the-focus-magazine/topics/the-focus- on-identity/interview/every-year-we-throw-away-the-trophies-and-start-all- over-again.html

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