Book Review: Secrets of the Moneylab

This book surprised me and is probably one of my favorites of the year, at least as it is really timely for our industry, as I'll soon explain.

Technology companies generally have laboratories in which they do research & experimentation. Game developers often do so as well. Perhaps not formally in R&D labs (though some of the larger publishers have them), but certainly doing experiments for new rendering techniques, AI models, physics experiments, etc.

For all this though, it's surprising how little science is put into the business side of the business. Things like pricing, to pick one example, are often done using some gut-feel starting point and by following competition.

Kay-Yut Chen, author of Secrets of the Moneylab, runs a lab at Hewlett Packard. He is also an economist. The lab he runs does research on behavioral economics and it's application in the tech industry. The book runs through experiments they did on consumer pricing, marketing, supply chain management, and much more. Also, they look at a number of different experiments from different industries.

Why is this so timely?

Consider the point made by Neal Young of NGMoco at his GDC2010 keynote, where he said that for the first time in the games industry, the business model is in the hands of the game designers. Add to that the fact that digital distribution channels and competing appstores will mean that developers have the opportunity to try many different experiments as they bring their games to market on different platforms (Something Dave Edery at Spry Fox has been doing).

Success on these emerging platforms is going to come from people's ability to put some science into the business side of their business, and this book provides an excellent start to getting your head around that kind of thinking.

Secrets of the Moneylab: How Behavioral Economics Can Improve Your Business

[note: I'm post-dating a couple of these posts as I didn't have a chance to sync them while I was travelling, and I like to track by when I read the book]

Book Review: The Big Lie

I recently got done reading The Big Lie: Spying, Scandal, and Ethical Collapse at Hewlett Packard. I enjoyed it for a couple reasons which I’ll get into in a minute.

The Big Lie is a behind-the-scenes account of the “Spygate” scandal that rocked Hewlett-Packard a few years back, and resulted in stepping down of Patty Dunn, the chairman of the board, not to mention criminal prosecution, senate hearings, and all kinds of other goodies.

The Spygate scandal in a nutshell is this: The HP board, in trying to find the source of several leaks to the press of confidential information, authorized a number of security investigations to be conducted by their own security personel as well as some outside contractors. Some of these folks used methods for obtaining phone records and other information that were at minimum highly unethical, and at worst illegal. The information about the investigation became public after a disgruntled board member decided to inform the press. Before any explanation could be proferred, the media had framed the story assuming the worst and from that point it was no longer possible to put the toothpaste back in the tube.

Its important to note that this is an accounting of the story from one point of view, one sympathetic to Patty Dunn. In this one she’s painted as the board chair that tried to institute modern day governance on HP’s board, and that stopping leaks was part of that. From that point, it was part putting trust in others, part not sufficiently monitoring methods used by underlings and contractors, and one part trusting her cohorts even as they were stirring the tar and buying feathers by the bagful.

Other books exist on the subject. Tom Perkins has one out that paints him as the board member whos moral compass impelled him to blow the whistle. The Big Lie paints him as a vindictive bully who’s disagreements with Dunn led him to wanting to destroy her. Other accounts paint CEO Mark Hurd as being distant from the workings of the investigation, where The Big Lie paints him as an intimately involved player who fed Dunn to the wolves to save his own skin.

I’m not sure which account is accurate, though The Big Lie seems very well researched. Chances are that all three of these players has their own version of the truth and that the real truth lies somewhere in between. No matter though, because the book has value regardless who’s story you believe. Here’s why:

1 – It’s a great view into the subtle (and sometimes not so subtle) politics that take place on a board of directors. There are detailed quotes from email passages back and forth, along with interview commentary about why certain things were said or how they were phrased, etc.

2 – It’s a good lesson in how – especially in the age of the Internet – a media spark or two of a story can start a firestorm that is out of control. Having been involved in a few (far less serious than this one!) PR damage control exercises, this one gave me the heeby jeebies!

3 – Most of all, it’s a fascinating look at how highly professional, seemingly ethical people can embark on a well-intentioned course that inch-by-inch one day results in them on the other side of the law, or at least clearly on the side of wrong. It made me think about some people I’ve known that have gotten divorced. They start out as loving each other and well intentioned, and slide down a slope a bit at a time until one day they are hating each other and you wonder “how could they have come to this?”. Anyhow, it’s an interesting look at this facet of people’s character and behavior.

Overall, a good read and recommended for those interested in these types of topics.