The following is a synopsis of Factfulness by Hans Rosling. It’s a great read on the Ten Reasons We are Wrong About Everything and Why Things are Not as Bad as We Think
Introduction: Why I Love the Circus
Hans Rosling was a physician, academic and public speaker. Together with his son, Ola Rosling and his daughter in law Anna Rosling Ronnlund, he founded the Gap Minder Foundation in 2005 to fight ignorance and encourage what he calls a more factful approach to life. Although this book, like his TED Talks, was written in his voice it is a collaboration between the three of them.
Although he pursued a career in medicine and became a leading academic, Rosling’s true passion as a child was the circus. He loved everything about it and was convinced he would one day live his dream and run off to become a performer. His parents had other ideas; they wanted him to enjoy the first-rate education they didn’t have and so he studied medicine instead.
When studying medicine, he discovered he could stick his hands down his throat further than anyone else. For a short time, he dreamed once again of joining the circus as a sword swallower. Because swords were in short supply, he decided to start with a fishing rod, but found it impossible. It was only later, when treating an actual sword swallower, that he learned the reason why he had failed.
The throat, he was told, is flat and can only take flat objects. To his delight he discovered he could actually do it and, later in life when he began giving talks, he often used it as a finale to his act.
He talks about sword swallowing for a reason. It’s one of those ideas which inspire people to think differently, to question perceptions and, as such, to accomplish the seemingly impossible. This is a key feature of the book.
Another is the continual need to test yourself and question your assumptions. To illustrate he lists 13 questions:
- How many girls finish primary school in low income countries around the world?
- Where does the majority of the world’s population live: low income, middle income or high-income countries?
- In the last 20 years, the number of people living in extreme poverty has increased or halved?
- What is the life expectancy of the world today?
- There are 2bn children aged 0 to 15 years old. How many will there be in the year 2100 according to the UN?
- The UN predicts that, by 2100, the world’s population will have increased by 2bn. Why is this: more younger people or more older people?
- How has the number of deaths from natural disasters changed over the last 100 years?
- There are 7bn people in the world. Where do they live: mostly in Europe, Africa, Asia or America?
- How many of the world’s one-year old children today have been vaccinated?
- 30-year-old men have spent ten years in school on average. How many years have women of the same age spent?
- In the 1990s tigers, giant pandas and black rhinos were all listed as endangered. How many are listed as more critically endangered than they were then?
- How many people in the world have access to some electricity?
- Over the next 100 years will the average temperature get warmer, stay the same or get colder?
He sets these tests to people around the world and the majority get them wrong. Our perception of the world is far removed from the reality. His aim in the book is to give people the tools to think in a factful manner, to challenge perceptions and understand the world more completely.
Chapter 1: The Gap Instinct
Our world view is often distorted thanks to the tendency to divide everything into two extremes with a space or a gap in between. For example, we often view the world through the perspectives of distinct groups such as ‘rich versus poor’, ‘us versus them’ or ‘developed and developing countries’.
This is simple and makes it easy to develop a view of the world, but he believes it’s wrong.
To demonstrate his point, he looks at our tendency to divide the global population into developing and developed countries. Those in developed worlds have better access to healthcare, live longer lives and have better access to electricity, while those in the developing world do not. However, the data shows that most people have access to all these things.
In reality, most countries fall into a gap between the perceived developed and developing worlds, with many moving towards the group of developed countries. As such, this divisive world view makes no sense.
Instead, he introduces four categories which can provide us with a better view of the world. These are:
Level 1: Earning less than $2 per day.
Level 2: Earning between $2 and $8 per day.
Level 3: Living off$8 to $32 per day.
Level 4: Bringing in more than $32 each day.
It doesn’t matter where you live in the world; people in each group tend to have a similar quality of life. Those in Level 1 suffer from poor nutrition, live hand to mouth and rely on walking to get where they need to go. In Level 2 people are better off; they can feed themselves have better access to electricity and education but they are not secure. At any time, an emergency could see them slip back to Level 1. At the top is Level 4 in which people can afford a car and an annual holiday.
This produces a more accurate view of the world, one which divides people by quality of life rather than simply where they are living. Even so, the traditional gap-based view of the world prevails.
To combat this, he cites a number of warning signs which can encourage us to slip into the gap-based world view.
- Comparing averages between two situations. We forget about the overlap which creates the illusion of a gap.
- Comparing extremes: For example, thinking of the poorest versus the richest is wrong because most people are in neither extreme.
- View from above: People in higher income levels look down on lower levels without any idea of the conditions in those levels. If you’re in Level 4, you might think of people in levels 2 and 3 as being poor when in fact they have a much better quality of life than you might think.
The reality of life is that there is no gap. Most people exist in the middle where the gap is supposed to be. Thinking about people in two groups distorts our view of the world. To form a fact-based world view, we have to recognise that many of our perceptions are filtered through mass media which loves to focus on examples which are extraordinary or extreme.
“There is no gap between the West and the rest, between developed and developing, between rich and poor,” Rosling writes. “And we should all stop using the simple pairs of categories that suggest there is.”
Chapter 2: The Negativity Instinct
“The world is getting worse”. It’s a view that we hear often and which, according to polls, most people share. However, it is also wrong. In truth, the world is getting better. We simply don’t notice when it does.
Most humans pay attention to the bad rather than good. As such, they believe the world is only getting worse.
There is some truth in this. The environment is deteriorating and terrorism is higher than it was 30 years ago. Even so, the state of the world is generally improving. However, according to Rosling, these improvements go unnoticed because they aren’t reported and we look back at the past through rose tinted spectacles.
Instead, minor setbacks receive greater coverage. If you look at the news, you’ll be forgiven for assuming that the world is set on a downward trend. However, the facts tell another story.
In the 1800s most people in the world were at income Level One. Extreme poverty was the norm for most people in the world. Today, only 9% of the world is still at level one. Life expectancy has improved from 31 years in the 1800s to over 70 years today. Slavery has been abolished, child mortality is down; plane crashes, hunger and deaths in battles have decreased. Access to electricity, water and health have improved.
Even so, the negative world view persists.
This view is caused by three things: mis remembering the past, selective reporting and the feeling that it would be insensitive to say things are getting better when they are still bad for many people.
When people start living better lives, they can forget how bad things were. They romanticise their youth.
Most reporting is negative. Good news is not news and neither are gradual improvements. A successful flight receives no coverage, but a crash will be splashed across all media outlets.
Rosling suggests three ways to control this negativity instinct.
- Remember that ‘bad’ and ‘better’ are not mutually exclusive. Things can be bad but they can also be better than they were before. Saying things are better should not be confused with believing everything is fine.
- Expect bad news. If we recognise that news is likely to disproportionately highlight negatives, we can be better prepared for it. Factfulness is remembering that most of the news which reaches us is bad news and there are plenty of positive developments in the world which do not make headlines. More news does not necessarily mean things are getting worse. It could equally mean that we are getting better at monitoring this suffering, which in turn will make it easier to alleviate it.
- Avoid romanticising the past. Life was not as good as we think it was, if we present history as it was, we can realise that life, in general, is getting better.
Chapter 3: The Straight-Line Theory
Life does not always work in a straight line, but our thinking does. In this chapter Rosling examines our tendency to assume a certain trend will continue along a straight line in perpetuity. Reality is very different but our straight-line instinct stops us seeing life as it truly is.
He talks about an Ebola outbreak in Liberia. Like most people, he assumed the number of cases would continue in a straight line with each person infecting, on average, another person. As such it would be relatively easy to predict and control as most other outbreaks of disease are. However, he came across a WHO report which said the number of infections was doubling with each case. Every person infected two more people on average before dying.
This spurred him into action. He discusses an old Indian legend. Krishna is challenged by the King to a game of Chess and asked to name his prize if he wins. Krishna asks for one grain of rice to be placed on the first square with the number doubling with each square.
The King agrees assuming it will increase in a straight line. However, it takes him a little while to realise that, by the time it gets to the 60th square, he would have to find more rice than the entire country could produce.
Many people assume the world’s population is increasing. If nothing is done it will reach unsustainable levels meaning something drastic must happen to stop this tend getting any worse. However, UN data shows the rate of population increase is slowing. As living conditions improve, the number of children per family is falling. Instead, growth can be controlled by combatting extreme poverty.
Rosling uses the example of a child. In their first few years, babies and toddlers grow rapidly. If you were to extrapolate that growth for the future, ten-year olds would be much taller than they are. Of course, we know that doesn’t happen because we are all familiar with how the rate of growth slows over time.
When faced with unfamiliar situations, we assume a pattern will continue in a straight line. Instead, he suggests we should remember that graphs move in many strange shapes, but straight lines are rare. For example, the relationship between primary education and vaccination is an S curve; between income levels in a country and traffic deaths is a hump and the relation between income levels and number of babies per women is a slide.
We can only understand the progression of a phenomenon by understanding the shape of its curve. Assuming we know what will happen leads to erroneous assumptions and false conclusions which will in turn lead to ineffective solutions.
To control the straight-line instinct, we must remember that curves come in many forms and we will only be able to predict it when we understand the shape of its curve.
Chapter 4: The Fear Instinct
“Critical thinking is always difficult,” writes Rosling, “but it’s almost impossible when we are scared. There’s no room for facts when our minds are occupied by fear.”
This is why the ‘fear instinct’ can be so destructive. When people are afraid, their ability to tell fact from fiction falls off dramatically. Factfulness demands that we control our fear.
Never before has the image of a dangerous world been broadcast more widely and more effectively than it is today. We are frightened of almost everything, but the truth of the matter is that the world has never been safer or less violent.
Rosling starts the chapter by looking back to an old story from his days as a junior doctor. It was 1975 and news came in of a plane crash. The survivors were being rushed to his hospital; senior staff were at lunch which would leave just him and a nurse to handle the situation.
It would be his first emergency and, in his panic, he confused one of the survivors for a Russian pilot and became convinced Russia was attacking Sweden. He mistook a colour cartridge for blood and was narrowly stopped from shredding through a G suit worth thousands of dollars.
Fear stopped him from seeing the situation for what it was. Our minds have an attention filter which decides what reaches it. This is the useful. The word contains vast amounts of information and we have to filter it to avoid overload. However, what gets through tends to be the unusual or scary.
This is why newspapers are full of events which are frightening. However, the more of the unusual we see, the more we become convinced the unusual is actually the norm. Our fear instinct has been baked into our minds by millennia of evolution. Fear kept our ancestors alive, but even though many of these dangers have gone, the perception remains.
The dangers are more real for people in Level 1 and 2 income categories because they are more likely to suffer threats. For example, they might be more likely to be bitten by a snake which might make them jump if they see a funny shaped stick. However, for people in higher income levels, being bitten by a snake is much less likely. Even if they were to be bitten, they have access to good healthcare.
For them, the fear of the snake does more harm than good. Newspapers know these fears are hardwired into our brains so they use it to grab our attention. The same fears which kept our ancestors alive are keeping journalists employed today.
The number of deaths from natural disasters has fallen as countries develop better healthcare and infrastructure. Organisations, such as the WHO and UN, help victims in these situations but people in Level 4 aren’t aware of their success because the media reports it as the most serious disaster in history.
It is important to look at things with a fact-based approach to make better use of resources. For example, the 2015 earthquake in Nepal which killed 9,000 people attracted global attention, but diarrhoea from contaminated water kills 9,000 children each year but receives very little attention in comparison.
2015 was the safest year in aviation history but this fact was not reported. The number of deaths from battle has fallen and so has the threat of nuclear war. All these good pieces of news slip under the radar.
Following the Tsunami in 2011, 1,600 people died escaping Fukushima while nobody died from what they were running away from. Fear of chemicals such as DDT leads to deaths which could have been treated by DDT. The fear of an invisible substance leads to more harm than the substances itself.
Terrorism causes fewer deaths than alcohol but receives far more publicity.
Fear is a terrible guide for understanding the world. We pay attention to things we are afraid of but ignore things which can do us harm. Factfulness is knowing how to tell the difference between actual risks and perceived risks.
Chapter 5: The Size Instinct
From immigration to the number of deaths in hospitals, we consistently overestimate size. In this chapter, Rosling shows how this leads to a distorted view of reality and warps decision making.
He starts by going back to his time as a young doctor in Mozambique in the 80s when it was the world’s poorest country. One in 20 children died. He argued with a friend about the standard of treatment at the hospital. He felt they needed to provide better care outside of the hospital, but his friend believed he should concentrate on improving care within the hospital.
He decided to look at the number of children who died in the hospital compared to those who died outside. To his surprise he found that, while deaths were comparatively low inside the hospital, over 3,900 people died in the community. He therefore decided to go out into the community to provide better care to people who couldn’t get to the hospital.
When looking at a single number in isolation, it is easy to give it too much importance. For example, when he saw he was saving 95% of the children who came to the hospital it was easy to assume he was doing a great job. However, when he compared it to those who were outside the hospital, he realised he had to do more.
Journalists always give us numbers and exaggerate their importance. It leads to solutions which do not help. At the hospital, people would have assumed increasing the number of beds would reduce deaths but, with more information at their disposal, they realised the best path was to improve the levels of care and education within the community.
To avoid the trap of the size instinct, he recommends using the tools of comparison and division.
For example, two million children died before the age of one in 2016. This seems high until you compare it with 1950s number when 14.4 million children died before their first birthday. Infant deaths are falling, but you wouldn’t know this if you only looked at the first figure.
A Swedish hunter killed by a bear received more coverage than a woman killed by her husband. The first incident was a freak event; but it received far more coverage than the second which is a far more common and serious risk. Rather than being concerned by domestic violence, the media became obsessed with an event which is unlikely to happen again for many years.
Another example comes from the Swine flu epidemic which killed 31 people in 2 weeks. However, 63,000 people died from TB in the same period, but it received no coverage.
The lesson is that we tend to over state the unusual and ignore issues which are far more common. It distorts our world view and leads us to make poor decisions. Factfulness is understanding that just because something is more widely reported, doesn’t make it more common.
Chapter 6: The Generalisation Rule
As humans, we love to categorise and generalise everything. While this can help us to simplify our view of the world, it can also lead to distortions. Attributing one characteristic to an entire group based on one unusual example leads to serious misconceptions and can have quite serious consequences.
As he writes, the generalisation instinct “can make us mistakenly group together things, or people, or countries that are actually very different. It can make us assume everything or everyone in one category is similar. And, maybe most unfortunate of all, it can make us jump to conclusions about a whole category based on a few, or even just one, unusual example.”
For example, he begins the chapter by talking about his experiences working in the Congo when he was presented with a less than appetising dessert made from lava. To avoid eating it, he tried to convince them that it was against Swedish custom to eat lava.
Generalisations, he says, are mind blockers. They create a distorted view of reality and often lead people to miss important opportunities. For example, after polling financial experts, he says, he found that they assumed most children in the world were not vaccinated before the age of one. In fact, the vast majority are. For that to happen, countries need a lot of infrastructure, which is also the same kind of infrastructure which is required for factories and other forms of enterprise.
The belief persisted because these financial experts believed the images of extreme poverty presented about some countries in the media. As such, these experts were potentially missing out on investment and business opportunities because they believed these countries were more deprived than they were.
To combat the generalisation instinct, he suggests travelling. This helps you to get out into the world and gain first-hand experience of cultures as they actually exist, rather than the way they are portrayed in the press.
As with other chapters, questioning is vital. You should always question the different categories you are given. Look for similarities across and within groups; remember to be suspicious of generalisations and to be aware when you are generalising one particular group from another.
Many people generalise African countries but they are not all at the same level of development. This has enormous consequences. The Ebola epidemic in Liberia affected tourism in Kenya even though the two countries are thousands of miles apart.
Majority is an extremely blunt concept. It can be anything between 51% and 99%; which does not produce a realistic picture of any situation.
Examples give a poor picture. Many people around the world suffer from chemophobia, the fear of chemicals, when in reality most are beneficial.
Assuming you are normal can lead to you generalising others and failing to understand the reasons behind their actions. What is normal to you is not necessarily normal to other people.
Factfulness is recognising what categories are used and keeping in mind that these categories can be misleading. While humans categorise and generalise everything, this can lead to stereotypes which can lead to poor solutions. By travelling and questioning assumptions, you can combat the problems caused by the generalisation instinct.
He also focuses on what he calls the 80/20 rule. We should always look at items which take up more than 80% of the total. Looking at the world’s energy sources, for example, you might feel they seem equally important, but only three generate more than 80% of the world’s energy.
Divide it by a total to get a clearer idea of the situation. If you look at the total emissions produced by each country, it might seem that China and India produce more Co2 emissions than Germany and the USA, but if you divide it by the population, you’ll see that USA and Germany produce more emissions per head than either China or India. A single number does not provide a clear picture of any situation.
Chapter 7: The Destiny Instinct
When Rosling gave a presentation to a group of capitalists and wealthy individuals about the opportunities of emerging markets in Asia and Africa he was surprised by their reaction.
At the end of the talk he was approached by what he describes as a ‘grey haired’ man who told him, in no uncertain terms, that there was no chance that African countries would ever make it. Despite all the positive data about economic progress he’d seen in the presentation, this man believed there was something about African society which meant they were destined to be poor.
This is an example of the destiny instinct and its roots go back to the earliest history of man. As humans, we often assume that a nation, group or culture’s destiny is determined by general characteristic which we believe it shares. For example, white Europeans are destined to be developed and wealthy while black Africans will always be poor.
This attitude persists even in the face of contradictory data. Not only do people believe it to be true, but they assume there is nothing that individuals in this culture can do to change things. Destiny, as they say, is all.
The instinct stems from evolution when people lived in small groups and didn’t travel very far. It was safer to assume things would stay the same as they wouldn’t need to constantly evaluate the surroundings. It’s also a great way to unite a group.
However, today’s societies are constantly changing. These changes occur gradually which gives the perception that things are staying the same. As such, gender equality is perceived to have remained unchanged around the world, but in reality, things have largely improved.
There is also an idea that Africa is destined to remain poor. However, most African countries have reduced their infant mortality rates faster than Sweden did. Asian countries have moved into the category of developed nations and many countries have escaped extreme poverty.
It was also assumed that the number of babies a woman has would depend on her religion. Religious women were more likely to have babies than those with no religion. However, careful analysis of data shows that the number of babies depends not on religion but income levels.
Other examples include the rise of support for women’s rights and liberal ideas in Sweden. Concepts which might have been far from the mainstream in the past are now commonly accepted.
To control the destiny instinct, you should recognise that:
- Slow change does not mean no change at all.
- Be ready to update your knowledge. Knowledge is never constant in the social sciences.
- Collect examples of cultural change.
Factfulness is the art of recognising that many things appear to be static just because change is happening more gradually. Groups are not defined by their innate characteristics and, just because something has been true once, it doesn’t mean it is set in stone for the future. Like many of the other attitudes discussed in this book, the destiny instinct is hard coded into our evolution, but while it might once have been helpful for our ancestors, it is holding us back today.
Chapter 8: The Single Perspective Instinct
We live in a world in which many people have strong opinions. However, when these opinions are set into a single world view, we can become blind to any information which contradicts us. This is the problem of the single perspective instinct and it can make it very difficult to understand reality.
“Being always in favour of or always against any particular idea makes you blind to information that doesn’t fit your perspective,” writes Rosling. “This is usually a bad approach if you like to understand reality.”
The single perspective instinct can be alluring. It is the preference for simple explanations and simple solutions to the world’s problems, but life is somewhat more complicated. This single cause and solution view creates a completely warped view of the world.
There are two main reasons why we do this: professional and political bias. Professionals will always see the world from the perspective of their own expertise. A hammer will see everything as a nail and will probably adopt the same approach. Even experts in their field can be wrong.
A poll of women’s rights activists found that only 8% realised that 30-year-old women have spent only one year less in school on average than men. They were so intent on seeing the situation as bad that they ignored the progress their own efforts have brought about.
He warns against relying the media to form a world view. It’s like forming an impression of a person just from his or her feet. The foot is far from the most attractive part of the body, so it doesn’t give you a fair representation of the rest of the person.
In the same way, the media tends to present the worst of the world; the disasters, the catastrophes and the crime. If you form your world view based on media reports, you’ll imagine the situation is much worse than it actually is.
Campaigners often paint the world as getting worse, but they are not aware that progress happening. If they ditched the attitude that things are only getting worse, they could garner more support for their cause.
People love the idea of being able to point to a single cause and single solution. For example, many use numbers to illustrate all sorts of issues, but they do not always represent the best solution. They do not help you to understand the reality behind them.
He recalls a conversation with the Prime Minister of Mozambique who said he believed the economy was making progress. Rosling argued that the data did not show this, but the Prime Minister replied that he did not solely rely on numbers to measure progress. He’d look at the shoes people wore and construction projects taking place. If the shoes were old, it meant that people didn’t have money to replace them. If construction projects were overgrown with grass, it suggested there wasn’t enough money being invested.
There is never a single explanation to any situation. It limits your imagination. Factfulness is realising the limitations of this perspective and finding ways to view situations from a wider range of viewpoints. This will help people to develop a more accurate understanding of the world they live in and to challenge their own world views.
Chapter 9: The Blame Instinct
We live in a culture which loves to apportion blame. This instinct assigns a clear cause to an event and finds someone who was at fault.
It’s a comforting approach. When things go wrong it is nice to think it’s because of bad people with bad intentions, but that seldom tells the entire story. We attach a lot of importance to individual groups or people, but it also stops us from understanding the world.
Once we find someone to blame, we stop looking for the actual cause of the problem and focus on punishing the person we think is at fault. The result is that we’re unable to prevent it from happening again.
For example, we might want to blame a plane crash on a pilot who falls asleep, but this does not stop another pilot from falling asleep in the future. Instead we should be looking at why the pilot fell asleep in order to stop it from happening again.
Hand in hand with the blame instinct comes the tendency to credit someone for an achievement even if the reality is more complicated. Someone has to take the blame or be given the credit. We love to point fingers if it confirms our belief
Even Rosling himself is not immune. When UNICEF hired him to investigate a company given a contract for malaria drugs, he became convinced that the company was acting improperly. Even before he finished his investigation, he started pointing fingers. In reality, the company was honest but simply had an innovative business model.
The same principle is at work when looking at the number of immigrants killed trying to cross the sea into Europe. It is common to blame the smugglers who traffic these people across the sea in small craft which are routinely dangerously overloaded. In reality, though, the problem is Europe’s immigration policies which state that an airline which brings illegal immigrants into the country will have to pay for their repatriation.
Airlines will not be able to tell if someone is truly an illegal immigrant in the few minutes they have before they board a flight, so they will ban anyone who doesn’t have a Visa. This means that refugees who have a right to enter Europe under the Geneva Convention cannot do so by any legitimate means. They are forced into the hands of the smugglers thanks to official European policy.
Any boats which bring refugees by sea are confiscated by the authorities which is why smugglers turn to cheap dinghies because they cannot afford to lose a larger boat.
On the other hand, we can also be in a rush to give credit to a single person or law. China’s low birth rate is accredited to Mao’s single child policy, but rates had started to fall before the law came into force. Instead the decline was down to institutions and technology that were in place.
Factfulness is the ability to recognise when someone is being scapegoated and to understand that this stops people creating viable solutions for the future. It is easy to look for a clear solution when something bad happens, but it stops us developing a fact-based view of the world and coming up with a solution which actually works.
Chapter 10: The Urgency Instinct
Rosling’s tenth and final instinct is one which can bring all the others to the fore: the tendency to take urgent action to solve a problem. While this might have served us well in the past, it can cause us to make rash decisions based on incomplete information.
The urgency instinct is embedded in our evolution, and in times gone by, it has served us very well. For example, if you think there is a lion in the grass you don’t want to spend time analysing your options; you simply need to start running. It’s always the safest option.
It can also be useful today. If you’re driving and someone slams on the brakes, you’ll have to take drastic action to avoid a crash. However, in today’s modern world, it can often create problems.
While Rosling was a doctor in Mozambique, a disease broke out that paralysed patients within minutes and sometimes caused blindness. He wasn’t certain that it was infectious, but the Mayor didn’t wait to find out. He ordered the military to set up roadblocks to prevent busses reaching the city. To get around these roadblocks, women asked fishermen to take them to the city by sea. It was a dangerous journey and many of these boats were overloaded. They capsized and causes the deaths of women and children.
After some research they discovered the root cause was eating processed Cassava. So, while the Mayor believed his prompt action was the safest approach, it actually caused a number of deaths which should have been avoided.
The principal of ‘now or never’, causes people to conjure a worst-case scenario. It kills the ability to think things through and encourages bad decision making. This is why salespeople come up with limited time offers. They are giving you a deadline and introducing a sense of urgency into your decision making in the hope you’ll be rushed into making a purchase.
To compel people to taking action, activists will often try to trigger the urgency instinct. They will stress how urgent a problem is and paint a worst-case scenario of what will happen if you don’t do something now. However, Rosling believes this is counterproductive.
Fear and exaggerated data can numb people to the risks campaigners are warning about which can lead to complacency and inaction.
For example, most countries say they are committed to fighting a climate change but aren’t tracking their progress. It begs the question: how can they truly fight climate change if they are not tracking their progress?
Rosling tells us that the world faces five serious risks: global pandemic, financial collapse, world war, climate change and extreme poverty. The first two have happened before while the second two are happening now.
They need to be approached with cool heads and data analysis rather than sparking fear and urgency. It’s about crying wolf. It can lead to these risks being ignored despite the dreadful consequences. We must worry about the right thing.
The idea of factfulness is to remember that things might not be as urgent as they seem. If you’re afraid and under pressure to act quickly, you are likely to make bad decisions. We must take a breath, take action based on data and be very wary of fortune tellers who insist they know what’s going to happen. Although the world’s problems need to be solved it is not always a good idea to take urgent or drastic measures.
Chapter 11: Factfulness in Practice
The final chapter brings everything together and demonstrates how all the lessons explained so far can be put to practical use. We see each of the ten instincts on show and how factfulness can lead to truly positive real-world solutions.
To demonstrate, Rosling takes us to a remote village in the DRC. He had travelled there to investigate a disease which was caused by eating unprocessed Cassava. The villagers believed he was collecting their blood to sell it and they were angry.
All the instincts discussed in this book were on display. The sharp needles and blood had triggered the fear instinct. The generalisation instinct made them categorise him as a plundering white man. Blame instinct caused them to assume he had malicious intent and the urgency instinct convinced them they had to act immediately, in this case by threatening him with machetes.
Things might have worked out very badly for both him and his translator if it hadn’t been for an old woman who successfully calmed the crowd down and explained that he was trying to help them. Although she was illiterate, she was bringing all the core principles of factfulness to bear in a very dangerous situation. As such, she managed to save both their lives.
In the same way we can bring it to our daily lives, in business, education and journalism and communities. Children should be taught to adopt a fact-based approach to life which will help them to develop a better view of the world and create better solutions. Children should be taught to be curious, to hold two different ideas at the same time. They should be willing to alter their opinions with new facts. This will protect them from ignorance.
Having a typo in your CV can keep you from getting a top job. However, people who make policies are placing a billion people in the wrong continent. Businesses have distorted world views and fail to understand that markets are growing in Africa and Asia. Being an American company is no longer a privilege which will automatically attract employees and customers. If investors relinquish their preconceptions about Africa, they may realise that it contains some of the best business opportunities in the world.
With a more factful attitude, journalists may become aware of their dramatic world views and present something more accurate and useful. However, it is a bit of a stretch to expect them to truly embrace all the principles of factfulness and start reporting the mundane alongside the unusual. The onus is on people to learn how to consume news in a more factful manner.
If you are ignorant at the global level there’s a good chance you’ll also be ignorant at the local level within your own community, company or organisation. They are all using erroneous data to manage their businesses and prepare for disasters.
Leaders in companies, cities, countries and organisations should carry out fact-based surveys to uncover ignorance within their organisations. Only by doing so can they develop a more accurate and realistic world view. Factfulness can be put into practice in all our daily lives, at home at work and in our communities.
After much research and work, the two Steves created their Blue-Box device which allowed them to call the Pope, Australia, and elsewhere free of charge. Jobs always felt that stealing long-distance calls was fair when a company like Bell was involved. Although it was illegal, Jobs believed they could sell these devices, and they did manage to sell over 100 of them. Jobs did all the pitching of the Blue Box to random people in the Palo Alto area. It was their first real entrepreneurial endeavour. In an illegal market like telephone hacking, however, there were risks. In one encounter, Jobs and Wozniak were robbed of one of these devices by a crazed man who held Jobs and Woz up at gun-point. By doing something illegal, Steve Jobs and Wozniak gained confidence that they could put a product into production. The Blue Box gave them a taste of the combination of engineering and vision. The lesson is that it turns out that crime does pay when the work is the forerunner of something like Apple.
The Original Macintosh Had Bad Sales:
The cancer had spread into the liver. Had doctors operated 9 months earlier they would have possibly arrested it. When he had a liver transplant in 2009 by going to another state and by having a multiple listing, the liver Jobs received was the product of a car accident that killed a 25 year old. Steve Jobs lied about his condition throughout the last years of his life by calling it a hormone imbalance. The privacy rights of the CEO had to be weighed, but Jobs also embodied his company more than most CEOs so the impact of negative news regarding his health could have an impact on the stock.
Three Central Points of Capital in the 21st Century:
The ratio of wealth and capital concentration was supposed to a constant, at least that’s what economics textbooks advocate. However in the data, it is not a constant.
The idea with Big Bang Disruption is it is an article that buildings on Christensen’s Crossing the Chasm.
Phil Knight, aged 24, traveled across the world to chase his Stanford MBA dream of creating a shoe importing business. Now a days, air travel is accepted as part of pop culture, with bucket lists, gap years and travel vlogging becoming the norm. But back in the 1960s, ninety per cent of Americans had never boarded a plane. Most Americans had not travelled more than 100 miles from their home.
Knight decides to enlist a friend for the journey, his Stanford buddy Carter was excitedly on board with the global adventure. They had an amazing ‘beach-drenched’ time in Honolulu, where the itinerary goes out of whack because they fall in love with the place so much that they decide to rent a place and find jobs. From selling encyclopedias to securities, Phil finds he is uncomfortable being a salesman, and even more uncomfortable with rejection. Eventually, he moves on in his travels alone, as Carter chooses to stay behind for a girl he found. The journey Knight is on is one of self-discovery, to find out what interests him – and perhaps denotes something we all can relate to at one point of time or the other.
He describes his travels through various countries, elaborating on the ones he enjoyed the most while the rest are clipped to a couple of sentences. Knight searches for spiritualism everywhere he goes – as if he is seeking out a power higher than himself to give him directions. He does find the teachings of various cultures, but nothing moves him as he expected it to. Greece and its architecture, however, leaves a lasting mark on him. Athena the goddess of victory “Nike” is of particular interest. It might be historical revisionism but that name might come up later…..
Phil Knight creates his first business pitch in Kobe. Japan at the HQ of Tiger Shoes, Onitsuka Co. He was warned by two American ex-occupation military guys about how Japanese negotiating is completely different than the typical aggressive American manner. So Phil practices what he will say and how he will deal with his proposed pitch of the “Crazy Shoe Idea.” In the meeting, which featured top Tiger Shoe brass, Knight ends up speaking from a safe space – channeling the speech he gave at his entrepreneurship presentation at Stanford, something he had studied really hard for (‘58-’62) and which had been then the basis of his “Crazy Shoe Idea.” The basic pitch can be captured in the title of his small business class paper: “Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras?”
Knight was pleased with how the meeting went. The Onitsuka team seemed intrigued with his US distribution strategy which was peppered with quantitative insights, market sizing and a vision for getting Tiger ensconced into the US mainstream. When they asked what the name of his company was, Knight replied with “Blue Ribbon”. His pitch also hit a nerve as the Japanese management were seeing Yen ($) signs via the US track. Without knowing the outcome of the meeting (as Japanese are stereotypically hard to read), Phil had his father wire fifty bucks to Onitsuka so that they could send over shoe samples they talked about in the meeting.
When Phil arrives home, looking bohemian and travel worn, the first thing he asks his dad is if the shoes have arrived. This part of the ShoeDog story is interesting not just because there is a very beautiful description of every country he visited, but because the reader can see the author’s passion for shoes developing in successive stages – from nothing in Honolulu to noticing the shoes of even beggars and statues. Great minds connect desperate events to create innovation; Knight was already on his way to greatness.
The above synopsis is based on notes from ShoeDog by Phil Knight.
Phil Knight’s family dynamic has changed upon his return; he finds that something has changed in him – it is not just his scruffy beard and castaway attire that causes his mother to thoughtfully call him ‘worldly’; there is a fundamental change in his spirit. Buddhism had captured him; be one with the path.
Having been betrayed by someone he thought was a business associate and having lost fifty dollars borrowed from his father for the purpose of getting a specific pair of shoes shipped, he comes to the realization that he is actually drifting in life without a sense of purpose. He brings this up with his father, who encourages him to talk to a friend of his, Mr. Frisbee.
Now, if you are not adequately educated, your career and earning scale might go down as you progress from job to job instead of going up. Therefore to secure a solid financial return, it is necessary to do two things – get a CPA to strengthen the MBA Phil already had.
This though poses a problem for Phil because he hadn’t studied accounting as a major and didn’t have the necessary hours to qualify. He therefore enrolled at Portland State for three accounting classes. Portland State is a far cry from something like Harvard (something that both Phil and his father realize), but Knight finishes his nine hours and starts working at the accounting firm Lybrand, Ross Bros. and Montgomery. It is one of the Big Eight National firms, but the offices in Portland are quite small. Knight takes this positively, reflecting that this would give him a chance to learn the language of business.
The best example of how important work is at this firm is reflected when Phil is refused a holiday on the day after President Kennedy’s assassination. Of course, the upside to all this is that Phil is earning well. So he buys a car for himself. His life has finally taken a definite direction, and he seems set in his profession too. However, the chapter closes with him often wondering if his travels around the world in ’62 were the peak of his life, and there is nothing better to look forward to…..
Growing up equipped Knight to deal with rejection, both in professional and personal life, something that was severely lacking in him before. His mother (Lota Hatfield Knight) is an interesting character, who may, as per first impressions, seem meek, but had many layers to her. She was a confident woman who did not hesitate to support her son in front of anyone, whether it was her husband or the outside world. She did not speak much, but proved herself through her actions.
Another important figure in Phil’s life is Bill Bowerman. He was a taskmaster during Phil’s University of Oregon stint. Bowerman was frugal with praise and known for churning out successful athletes. Phil yearned for his approval, but knew that it was not something that he’d get much of. Having finally received his shipment of shoes from Japan, Phil Knight sent over two of the pairs to Bowerman, expecting him to praise the shoes. Bowerman asked to meet Phil over a deal to buy more shoes and it goes even better than expected – Bowerman wants to be a partner in this business. He calls Phil over to meet his lawyer, which causes him some trepidation, but the discussion is brief and settles any fears Phil had.
The Tiger shoe import business booms, and Phil feels immensely content and happy with his success. However a wrinkle pops up when a competing US distributor on the East Coast sends a letter to Blue Ribbon demanding they stop selling Tiger shoes. Unable to take rejection, Knights falls back into old habits, but eventually decides to fight back and makes a visit to Japan. Phil’s character essentially changes – instead of allowing rejection to simply make him miserable, he lets it propel him into success. He flies to Japan and successfully gets rights to sell the shoes for another area in his thirteen states.
In 1964, Knight also falls in love after meeting a girl while climbing Mount Fuji. It is a whirlwind romance, and they part without any plans of meeting up. One day, however, Sarah lands up at his doorstep and it is here that the love affair actually begins. The family is charmed by Sarah, and the author falls head over heels for her. Eventually, Sarah cools off and this causes heartache to the author, but brings up a very essential relationship to the forefront – Phil’s relationship with his sister Jeanne which till now has not been talked about. She supports him and speaks the first words of comfort that actually reach him, and goes on to become the first employee of his company since she had read all of Phil and Sarah loveletters to eachother, she would manage the mail room at Blue Ribbon.
The above notes are based on ShoeDog by Phil Knight – Founder of NIKE INC.
All along, Phil Knight believed that growth was possible for Blue Ribbon, his company importing Tiger shoes from Japan. His bank, however, had a different idea. A conservative banking institution, they did not believe in risk and were only concerned with maintaining equity in case of failure. This is key commentary on the difficulties faced by entrepreneurs back in the day. Entrepreneurs have various funding options, but back then even inter-state financing from banks wasn’t possible. Venture capitalists were a far cry, and investment in startups wasn’t an established subculture. There wasn’t much encouragement given to a new idea.
Phil Knight renews acquaintances with an old classmate he had met on the tracks one day, Jeff Johnson. Johnson reveres the sport of running like no other, and looks upon it as something almost divine. Although enthusiastic and energetic, Johnson is perhaps too much so. Beginning with working part time for Knight, Johnson ends up becoming the first full time employee of the company through sheer doggedness, quitting his day job for it. Johnson is relentless in his communication – Phil starts getting overwhelmed with Johnson writing two to three letters everyday.
With the bank continuously bearing down on him for maintaining equity and having to wheedle for a loan everytime he needs to order a shipment, Knight applies for the position of an accountant and gets recruited by Price Waterhouse. This becomes a stepping stone for him as he meets the next big influence in his life – Delbert J. Heyes, the leader of his team. Heyes makes Phil look at numbers in a way that makes him feel like an artist. Moreover, this job allows Knight to intricately study how and why different kinds of companies go under, and how the ones that survive flourish. Cash is king in all cases; accounting and cash. Phil starts taking notes for the purpose of his own company.
Phil Knight was anxious about the ending of the one-year contract with Tiger and waiting for an alert to either renew the contract or end it. By the end of 1966, Phil had sealed a three-year contract over the head of a better placed, richer East coast operation. The journey between how this is made possible is a lesson not only for entrepreneurship, but in life itself.
1966 was the point in time when Knight actually starts realizing the importance of Johnson. Divorced, broke and car hurting from an accident, Johnson managed to reach levels of sales that Knight himself believed to be impossible. Having made a deal with Johnson that after reaching a certain number of sales Knight would allow him to open up the first retail store, Johnson is ecstatic and puts in all efforts to make it the place for runners to be.
1966 was an important landmark not just in Phil’s journey but perhaps also the history of running. Running for fun or just to keep fit wasn’t common back then, and runners were often made fun of. In the middle of all this, Johnson opens up a place that looked great, but also has essential books on running, some from Johnson’s own personal library and souvenirs for the more dedicated customers. It becomes a place for runners to find solace, to find more of their own.
Although Knight does not like to offer encouragement or reply to Johnson’s letters too often, preferring to leave him to his own devices, he is faced with no choice when he learns that a major competitor is angling for exclusive rights for selling Tiger shoes in America. Plotting overnight with Jackson at his apartment, Knight visits Japan to find that everything has changed – from the man in charge to the conference room furniture.
Though always a risk taker, Phil is firmly in the territory of risks. There is no going back from this point. Aware of the possibility of failure, Knight has grown way past his days of fear of rejection and only hopes that if he has to fail, he fails at the earliest point so that he may use his lessons from this failed venture in the next. The change from a sheltered, rejection averse boy to a man who can find positivity in the face of complete failure is stunning. Phil does not fear failure anymore, but welcomes it with open arms, and this attitude ends up winning him a great deal against a competitor who won’t even be aware what hit them.
Just when Knight has begun to appreciate Johnson’s loyalty as a team player, he is forced into a meeting with his salesman father Owen’s office who was bent on getting his son a stake in the company. The negotiations end with a fifty dollar raise for Johnson. Despite all this, this is where Knight has begun to appreciate Johnson truly, having recognized the fact that it is near impossible to find someone ready to uproot their life and open up a new office in a new location in such a short time.
There is a legal face-off with Adidas over the name of a new shoe, which only serves to highlight that Blue Ribbon is now beginning to affect the big leagues. Although it is early days, the competitive mindset of Blue Ribbon is evident when they name their new shoe Cortez after Adidas made them back off the name Aztec because Adidas was going to use it (Cortez defeated the Aztecs).
As an assistant professor, Phil knew that accounting is about balancing these equations. He met Penny Parks in his accounting class. In fact she turned out to be the best student so Phil hired Penny as a bookkeeper. Knight asked her out on a date and they hit it off and were married within a year.
1968 – A synopsis
This is where the story of how he meets his future wife begins. She is a student who looks different than everyone else and diverts his attention by sitting in the first row. A Julie Christie look-a-like, Penelope Parks never participates in class discussions (which the author makes lively by using the Socratic method), but ends up surprising the author by getting the topmost grades in her assignments.
1969 – A Synopsis
Mention is also made to the historic moment when two athletes, John Carlos and Tommy Smith, raised a protest at the Olympics as a protest. Knight mentions that Bowerman naturally supported them, because he would support all runners. This adds to the facet of Bowerman’s personality revealed before – of putting running before everything. Not only is it above business (he never mentions his company in the bestselling jogging book), but it is also above his beliefs, whether racial or otherwise, at the time. He supports his runners simply because they are that.
The relationship between Woodell and Knight also develops. This is the first time that Knight speaks of someone with such fond remembrance that one can detect a yearning of nostalgia for times spent with Woodell. Woodell is an inspiration and much more self-reliant than most able-bodied men. He abhors pity and is dedicated to his work. He quickly becomes a very important part of the Knights’ lives, both professionally and personally.
1970 – A Synopsis
This is the point when Knight faces many challenges, including one in his personal life. The gamut of challenges starts with a meeting for contract renewal in Japan that goes well but leaves him in doubt nevertheless. He secures 3 more years of Tiger shoes with distribution rights but simultaneously, orders start coming in with even worse delays – earlier, they used to be merely late, now they are the wrong models as well the wrong sizes. Customers start getting frustrated in large numbers. Of course, the Blue Ribbon staff understands that Onitsuka Tiger are likely first fulfilling their demand in Japan and then sending the leftovers to America.
He names the offering the “Sport Tech Company” but when this public offering disastrously fails, however, it leaves Knight’s confidence in his life’s work shattered. He is left questioning himself. Although he blames various things for it (Vietnam, the depression) he is ultimately racked with humiliation at having thought too much of something that clearly was not. Still struggling, Knight struggles to find money so badly that he accepts the last life savings of Woodell’s parents.
To continue the downward spiral, Knight also loses the physical agility which he was so proud of. Having gained weight, he could no longer run the way he used to. It all comes down to one humiliating moment when Knight cannot keep up with Grelle in a private run. But this serves as a springboard, and Knight begins to shed the extra kilos.
He discovers some disturbing news – his doubts in the meeting in Japan were correct, it is evident that Kitami is shopping for another US dealer to distribute the Tiger shoes products. This is when he makes the strategic decision of inviting Kitami to his country and his home.
There is a subtle link between the physical fitness of Knight and his ability to keep his company running. This is perhaps because in the past chapters he has always used running as something to soothe him, or calm him down, or even blow off steam – he has gone on a run before big deals or before big decisions, often feeling better afterwards. His lack of physical fitness came as a realization to him at a particularly low point professionally. But once he overcomes that and goes back to his previous weight and is able to proudly run again, even bigger problems than before seem easier to resolve.
Kitami’s unforgivable behaviour continues when he leaves Penny alone to fix a flat tyre on the highway, himself just sitting in the car. Things continue to go downhill at a get-together at the Bowermans’, where Mrs. Bowerman has allowed alcohol when she generally doesn’t. Tensions are already high due to the war, and Mr. Bowerman gets really tipsy and makes his anti-Japanese sentiment known. The weird night ends with Kitami playing songs on a guitar, making everyone fall into silence.
Phil calls up Carolyn Davidson who had done some ad work and asks her to create a new logo that would set King’s company apart from Onitsuka and Adidas. She came back 2 weeks later with various lightning bolts and other motion like icons. Knight singled out 5 and gave her a few more days to refine. It looked like a wing and invoiced Knight $35 USD. Knight picked the one that looked the best although he wasn’t happy with it.
After trying out various factories, including the factory Canada which sucked, Knight finds a dream factory that manufactures shoes to his satisfaction; a Nippon factor that build Firestone tires. Although he finds a few faults, overall, the quality control and the manufacturing speed are above reproach. He ends up naming the rest of the models in a fit of exuberance, and feels victorious afterwards. That feeling of victory is similar to how he felt when his son was born – the words ‘we made this’ are common in both situations.
Knight also recalls that Bowerman was interested in innovation in the soles of these shoes in preparation for the 1972 Olympics. He was looking at waffle irons in a new way and believed that they could be the basis of a new rubber sole. Turns out he was inventing the future.
This chapter is important not only because of the beginning of the evolving of the company as it is popularly known, but also delving into aspects of personality of the characters previously unexplored.
This chapter focuses on how the company starts shaping its own unique identity. Till now, Knight and his people have been working hard, yes, but they have always been controlled by someone else; by Onitsuka Tigers and by Kitami the vendor contact that effectively bossed Knight and Blue Ribbon around. The key was that they would need at least a few months of Onitsuka inventory to keep the cashflow coming in order to support the Nike venture, so Knight needed to be super quiet and hope that Kitami didn’t read local papers. Although Japan’s support was important in the initial stages, this chapter shows how the company has grown strong enough to throw away the shackles and follow their own path, somewhat deviously. After all, the Onitsuka contract stipulated that Blue Ribbon could only import track shoes from Onitsuka factories and with the Tiger brand.
At a trade show early in the year, shoes salesmen showed some interest even though the dream manufacturer’s shoes were flawed, some of the paint was too shiny. The orange Nike’s stacked up beside the Onitsuka Tigers perplexed Knight’s team as well: Johnson, Woodell in particular. One of the customers was asking “what the hell is a Nike?” Knight explained, “it’s the Greek goddess of victory”. And what is this logo?” Knight – “it’s a Swoosh.” Customer – “What’s a swoosh?” Knight – “It’s the sound of someone running past you!” They loved it and bought pairs. Johnson couldn’t believe the excitement and asked one sales rep why he was buying inventory, he said “because Blue Ribbon has never bullshitted us in the past, and we’ve been doing business for years.”
Kitami stormed off to one of the Blue Ribbon shoe stores and found boxes upon boxes of Nike shoes stacked in the back. Thus follows a meeting where both sides threaten each other with lawsuits, and their business connection is terminated. Knight, in this chapter, shows the true qualities of a leader. Till now, although effective, there hasn’t been much evidence of Knight encouraging people, as he prefers not to be the hands-on type of leader. In the meeting after this incident, however, Knight single-handedly converts the defeat and pessimism in everyone’s body language to hope and an eagerness for success. The story after this almost feels destined for success.
The company also meets with good success at the Olympic field and track trials, where they get athletes to wear their apparel and their shoes. They eventually end up signing a deal for ten thousand dollars with Ilie ‘Nasty’ Nastase the tennis pro for $10,000.
In this chapter, Knight also consciously or subconsciously reveals that this is the turning point from which there is no return. Till before this, Knight’s mindset has always been that if the business fails, it had better fail fast, because then he can get out young. But here, after witnessing the legendary win of Prefontaine and the emerging of the Ducks as winner, it is clear that Knight loves sports so much they are a part of who he is as a person, and he will never be truly able to turn back.
Knight gives Prefontaine a job as a promoter for Nike. Prefontaine was the identity of Nike and vice versa. Phil loved Prefontaine and had Hollister support Pre’s.
Problems have started cropping up – and not just for Knight. Pre, the star of the last chapter, finishes fourth in the Olympic finals. His financial condition also takes a turn for the worse because Olympic athletes weren’t allowed to collect endorsement money. Knight eventually decides to hire him and use him to spread the word about Nike.
Pre’s personality takes up a lot of the chapter. He is the sort of person people automatically become intimidated by when he walks into a room. The ice eventually breaks over a meal when everyone realizes how Pre is just like them.
One of the most painful moments yet are chronicled in this chapter. The shoe market was changing, there was massive demand now for running shoes from Adidas to Puma etc but insufficient supply and Blue Ribbon was now less financially stable. Knight meets with his debenture holders after posting a loss of ($50K), and trying to answer their questions is very difficult for him. Staring up at him are working class faces who put their faith in him, and then and there, Knight decides that he will never take his company public – if facing a few debenture holders could make him feel so bad, what would thousand of shareholders do for him? He placates the debenture holders by telling them that he would keep the conversion rate the same for all the five years (when originally it was supposed to increase each year).
A new law graduate, Rob Strasser, is added to the legal team, and he and Knight hit it off. They bond over work, over sports and over having similar fathers. Strasser also fully believes in the company’s cause.
This chapter is a finger-biting account of the entire trial. It is described so well that the tension is palpable. Everything that could have gone splendidly right goes wrong in one way or another. Knight’s nerves are on edge after the countless question in the deposition, and he makes the mistake of not being well rested or well fed before coming to court. He breaks under pressure, often becoming incoherent.
The judge himself is a character whose different sides are revealed throughout the chapter. Increasingly dramatic and at first appearing very stern, it is later revealed that under all the dramatic announcements, he is a logical person who is simply making the most of a case that he doesn’t particularly like. His judgment finds in favor of Blue Ribbon simply because he finds that side most truthful – and it is shown how the judge is a very astute observer because he notices things like Kitami getting a translator but that Kitami would correct his translator in perfect English whenever he made a mistake in translation: an obvious ploy to pretend to not speak English well that went wrong.
They also needed money for a new factory since there was a weak supply line for the Nike brands. Hiding the fact that they took a large portion of the Nissho financing to pay for a new factory was a risky move. At any rate, Johnson helped Phil out and took on the role of running the factory on the East coasts in Exeter, New Hampshire.
This is where all the financial problems come to a head – there comes a point when the company is unable to pay Nissho, the salary cheques of the employees bounce, the bank refuses to associate with them anymore, an FBI investigation is prompted by the bank, angry creditors fly down to demand their money, all the while when the person from Nissho who was dealing with Blue Ribbon – the friendly Sumeragi – is replaced by a higher-up, Ito. He is so cold that Knight starts referring to him as the Ice Man.
The entire bank situation gets out of hand with the FBI potentially getting involved because of the missed pay cheques. Knight informs Nissho of the situation, preferring to be truthful. He also asks for a further loan of a million dollars to hold everybody else off. Ito demands to see the books before he makes a decision. This is a warning sign because Knight used the money from Nissho to build the Exeter factory – and Nissho had no idea about it. Knight spends a sleepless night, only to see that Ito handles it way better than Knight could ever have imagined.
Several creditors were arriving $100K owed here and there. The creditors are handled in an almost funny way – it would be hilarious if it weren’t so desperate – as Knight assigns a person to each creditor to make sure that they don’t bump into each other inside the building. A third person manages the movements and warns the handlers about the creditors. Knight jumps in and talks to the disgruntled creditors and manages to save the day for the time being.
Seeing Pre running inspires Knight, as usual. There is something different this time – Pre is not at his best, and everyone can see it, yet he puts in all he has in the last two hundred yards and wins. Knight recalls Pre’s famous saying, ‘Somebody may beat me – but they’re going to have to bleed to do it’, and vows to apply it in his professional life.
After the Knights drive back home after a good day, Phil receives a call just before dawn Ed Campbell over at the Bank of California (who Nike had just left), telling him that Pre is dead. Phil is shocked and can’t believe it, and tries to confirm the story. It is indeed true – Pre died in a car accident the night before. He was travelling home when he hit a bolder flipped out of the car and the car landed on him. Prefontaine was 24 years old.
Going public is the question that is raised multiple times, and is rejected everytime. It is not just because Knight is afraid of becoming answerable to shareholders – it is because it will change the entire culture of the company. Bowerman finally snaps. First, he refuses to give a personal guarantee on a loan for the company, and then asks Knight to buy his share at a reduced price. Knight pleads with him to stay on and retain a small percentage. Later, Bowerman calls a meeting and tries to pick a fight where there is no basis for one. It is clear – he isn’t happy, and he doesn’t feel involved.
Nike, meanwhile, brings about a new revolution by changing the color of their most popular pair of shoes to blue, so that they go well with jeans. Till now, no shoes company had been able to massively breakthrough into the everyday wear market, and almost overnight Nike cracked the code.
This chapter very candidly shares the kind of work culture Nike had at the time. Their annual retreat is called Buttface – and even though they are posting millions in sales there is nothing formal or corporate about this retreat. Ideas are discussed and dismissed in raucous voices, peppered with appropriate insults. It doesn’t matter who comes up with the idea, there is no hierarchy, counter-budgets are proposed, distribution is re-considered, all in a congenial relaxed creative hotel bar. No one is out of reach of the insults, including Knight himself. Knight feels brotherly love and loyalty for his entire team and knows that they will face the world together.
Nike is now moving forward in two aspects – innovation and advertising. Both of these are giving it the kind of momentum that has begun to scare the big players like Adidas and Converse. Knight meets Rudy and Bogert, who bring with them the crazy sounding idea of using air bubbles in shoes soles. While skeptical at first, Knight thinks the idea has potential when he tries it out. On the other hand, Bowerman comes up with an idea that ends up causing injuries to people. Though the people do not lash back, Bowerman becomes dejected. Knight tries to console him, but what actually works in the end is his competitive spirit – when he comes to know the new air sole idea.
This is the result of lobbying from competitor companies and the use of an archaic law which stipulates that any importer of nylon shoes must pay a tariff of 20% of any US competitor’s shoe price. So these US competitors made a small run of shoes and set the rack rate to an insane price. The law was retroactive as well so $25M needed to be coughed up. Knight decides he has no other option than to hit back with all he has got because it is financially impossible to pay such a sum, and then continue to pay at this rate.
Nike suffers through a major failure. The Tailwind is released – the new shoe with twelve new innovations including air in the soles! It gets sold out faster than any other model, but soon there are serious complaints and the company has to issue a recall and refunds. This hits everyone hard, particularly Strasser. The overall mood at the company seems pessimistic, even as they try to console themselves. The only person who seems to have achieved something positive out of this entire episode is Bowerman – he seems to have come out of his slump at this news.
Finally, when they meet the senator, he needs no convincing – he directly tells them he knows of their situation, and what can he do to help? Both of them clash on this and can’t decide, because they aren’t ready with an answer – they didn’t expect the Senator to already be on their side. Knight says they will get back to him soon.
Knight is really keyed up about this and wants to do everything right. He makes himself and his entire team who is going to go with him read up on China, its traditions, customs etc. He also decides to stop in Japan before going to China, to give everyone else a chance to acclimatize themselves to Asia. The meetings go really well, although they find that the factories and the shoe market in China is underdeveloped.
Knight’s primary problem with going public is the lack of control, and so when he is told that there is a way to go public without losing control, he is all for it. His team agrees. They work on the process – hiring a law firm, preparing a prospectus, meeting with various important people on Wall Street, debating about the price. It is the latter which causes much argument. The law firm is not ready to take the price above twenty one a share, and Knight is determined to have it at twenty two. He believes they are worth that much, and there is another company called Apple that is going public at the same time, at that price too.
You could also move your drug to Over the Counter as eventually was the case with Nexium. You should try to squeeze (i.e. maximize) as much value out of these products as possible, just like any other industry. I also learned that GERD is a real issue (if you have heart burn more than 2 times a week) but the obvious problem being that the real disease is mixed up with a bad sandwich or a bad diet. In your marketing, you may be mixing people who need it with people that don’t. With over the counter solutions, you are relying on the individual to make the choice. Now that the drug can be bought with a prescription, the pharmaceutical company is lacks about the possible dangers of the medication. This grey area generates surplus revenue for the firm but in this case; as with many drugs, you cannot blame the doctors for mis-prescribing. From a pharmaceutical standpoint, it is nice to have some plausible deniability when it comes to selling drugs that simply inhibits stomach acid from being produced properly. Basically, a side issue is whether messing with stomach acid production is medically sound in most cases…why not create a drug for other semi-real conditions? Some drugs are created to fulfill a condition that is relatively benign…shyness for example (Paxil, Prozac, Celexa, Zolft, Lexapro, Luvox).
What I Learned: The Shareholders Will Dictate Internal Decision Making If They See Fit:
What I Learned: Conscience Shifting is An Admittance of A Competitive Market Reality:
What I Learned: Ministers will Jump Ship if They Think They Will Lose:
What I Learned: Patent Law Is Very Cool:
What To Do About It: The market will penalize the company for trying to do a deal that they haven’t done before:
What I Learned: The Three ways to Affect the Timeline of a Pharmaceutical Company:
What I Learned: Opioid Crisis:
Topic One: What is the scientific method?
