(2025-11-27) Chin The Shape Of The Game We Play

Cedric Chin: The Shape of The Game We Play. A few weeks ago someone pinged me on Twitter with a very interesting comment. He said that whilst he enjoyed learning about business from biographies as much as the next person, “reading books about weightlifting doesn’t shortcut actually hitting the gym, doing the reps, feeling the movement and developing the instincts.”

this reader is also right, of course. There is much in business that can only be learnt by doing. I would never suggest ‘read business biography’ to someone who was just starting out. Getting actual experience is more important the earlier you are.

I thought it would be useful to explore the ways in which business is not like weightlifting (or Judo, or most sports, for that matter).

In 2022 the US Federal Reserve hiked interest rates at the fastest pace since 1982. This increase was mirrored by many central bankers in major economies around the world. (end of ZIRP)

The rivers of cash that had been running since 2008 — that had gushed especially freely during the COVID years — were choked off. Capital had a cost again.

And then a whole bunch of startups started dying.

Concurrently, a whole bunch of venture capitalists saw their VC careers end during this period. Some are still running funds today (never able to raise another) but most unserious VCs have washed out by 2025.

And across the tech industry, the layoffs began.

In weightlifting you do not experience regime shifts

Disconcertingly Subtle Reflections

It’s important to notice how delayed many of these events are. The Fed hiked interest rates in 2022. I am writing this in 2025. Companies have died or done layoffs for every year from 2022 onwards. More are likely to come; companies that raised debt and investors that operate in private credit (debt financing) have locked in rates for a number of years. For these market actors, the consequences of their unwise actions (if any) have not yet come home to roost.

most of us pick up near-invisible assumptions about the way we work from what we learn in our 20s. If your 20s coincided with ZIRP, like me, you’ve probably been in an adjustment period ever since.

Actually, let’s run through my experience as a prototype. I want you to imagine that you graduated into the post GFC world, say in 2011, and learnt how to work in your first job in the 2010s.

As the decade progresses, you change jobs; you continue to absorb ‘this is the way we do things’ even as you rise in your career. And while each company is slightly different, there is a fundamental stance — a set of underlying assumptions that everyone shares that nobody questions. (framing, best practices)

In the wake of the post-2022 regime change, you might have noticed some of these assumptions fraying

cheap capital gets into everything: it distorts buying behaviour throughout the economy

Companies and people feel richer, so they pay for more SaaS, and hire more people, and fund sloppy digital transformation programs that rack up ever increasing cloud costs.
Which makes selling SaaS and cloud easier, which makes software growth easier.

I started my career as a software engineer, and still have great affinity for the industry. As a result, I’ve paid special attention to the folks who have written about the change in operating assumptions over the last few years

Here’s one, an excellent piece by engineering leader Uma Chingunde:
When I think of what happened in tech as we went from ZIRP to post-ZIRP, I often think of the kids' game of musical chairs.
In early 2022, the music stopped abruptly for the tech industry with the end of ZIRP.

During ZIRP, hiring was frenetic, but the shift to post-ZIRP triggered a rapid slowdown, visible even before public layoffs began. There have now been multiple years of layoffs, but the number of open jobs has only slightly increased, as seen in this graph, leading to a large pool of available candidates relative to jobs. A larger pool of candidates means more conservative hiring behaviors. Hiring managers can wait to hire someone who has already done exactly what they need vs. taking a bet on someone who has the potential.

The tech job slowdown disproportionately impacts two groups: early-career professionals struggling to enter the market and seasoned leaders finding it difficult to re-enter at a comparable level in case of a layoff or a break.

Chingunde then walks through some of the less obvious implications. One of those implications is that it’s harder to hide now if you are incompetent. Or, to flip this on its head: over the past 15 years there were a great many senior people who were successful, who were paid high comp packages, who grew large, respectable followings and did shiny tech talks … who were actually subpar operators with good political instincts. (soft skills)

Here’s another piece, this one from James Boyer:
A senior leader recently handed me a “gift”: a plan to hire more engineers. I paused. “Why?” I asked. “What problem do we have that hiring solves?” They looked at me like I had passed Go and didn't want my $200.

What matters now—and what should've always mattered—is leverage. Outcomes. Impact per engineer

Shortly after ZIRP ended, I read The Birth of Lean, a history of the creation of the Toyota Production System.

folks who invented TPS over the course of the 50s and 60s

There is one interview in the book that haunts me today, now that I’m rereading it with this regime change in mind.

EVP: I can’t sign off on ¥150 billion. Cut it 20%.
Nemoto: So I’m supposed to come up with a way?
EVP: That’s right.

The first time I read that interview, I thought to myself “oh, how cute.” But upon rereading the book, I realise that I should’ve paid more attention to this interaction. In my entire career, I have never, not once, had a conversation like that. “You’re expected to do 20% more, oh by the way, we’re slashing the budget by 20%. Figure it out.”

If someone had said that to me, or perhaps if someone had said that to a manager I reported to, I think they would have thrown a hissy fit. They would have thought it impossible. My entire generation in tech cannot imagine getting more done without also increasing headcount

Nemoto and his General Managers protested, but they got it done. Why? Because they’d seen it done before. Because Toyota did not do layoffs. And because money was tight.

When folks talk about TPS today, they throw around words like ‘tacit knowledge’ and ‘process power’. But they don’t often talk about the path it took to get there. That path involves conversations like the one Nemoto had with his EVP, again and again, over decades

Best Practices That Are Not Best Practices

The overall point I’m making here is that if you treat business like weightlifting, you will periodically learn bad techniques. Perhaps bad is the wrong phrase. Perhaps ‘techniques that are overfit to the current capital environment’ is more accurate.

everything that emerged as a best practice in the previous 15 years is now suspect.

modify “Everything that emerged as a best practice in the previous 15 years is now suspect …” and add “until it has been shown to give me the outcomes I desire, in this current environment.”

Our most recently published case was about Data General — a minicomputer company that rose with the minicomputer boom of the 60s, and died, like many of its contemporaries, in the personal computer (PC) boom of the 90s

A question any alert reader should ask when reading that case is “could one have saved DG (Data General) in its final decade?”
If you were an operator who had cut your teeth in the computer industry, you would be hard pressed to do so

Again, this is where reading some business history can help. Some industries are cyclical. Think: shipping, trucking, hotels, semiconductors. In those industries it is normal to evaluate business leader performance by how well they navigate the natural capital cycles of their industries.

It’s also not unusual to have everyone believe one thing about business, only for it to be proven wrong years or even decades later. From 1981 to 2001 Jack Welch ran General Electric, or GE. For much of the 90s he was lauded as one of the best CEOs in the world. The halo effect of his reign lasted maybe a decade after Jeff Immelt took over as successor, right as GE’s fortunes began to turn.

contrast Skates’s approach to that of former NASA astronaut Bill Anders, who came into General Dynamics and then did something truly extraordinary:
“In the first two years of their regime, Anders and Mellor reduced overall head count by nearly 60 percent (and corporate staff by 80 percent),

Anders recognised that the defence industry was in permanent decline, and sold off weak pieces of General Dynamics to strengthen its balance sheet.

passed on a healthier company to his successors, who slowly began to expand GD into better, more lucrative businesses when the opportunities presented themselves

How did Anders know to do this, when Skates did not? This question is not that easy to answer

The new General Dynamics leadership, clearly, was in favor of decentralized, lean operations. As they executed a company-wide clean up, the pair discovered that most of the company’s plant managers had too much inventory on-hand.

They also noticed that the managers did not focus on ROI while making additional capital requests.

The new General Dynamics culture strongly emphasised returns. Longtime executive Ray Lewis said: “Cash return on capital became the key metric within the company and was always on our minds.

Previously, General Dynamics used to aggressively bid on most government contracts. Now, however, it only bid on projects when the returns were compelling.

What I think must’ve happened is that Anders saw General Dynamics as an engineering problem to be solved, whereas Skates thought more ... conventionally. In this Anders was like precious few other CEOs. In 2012, Will Thorndike published The Outsiders, a collection of stories about ‘capital allocators’ — Anders being the subject of one of the chapters

Conventional wisdom that looks stupid in hindsight rarely looks stupid in the moment. Welch ran GE during a very specific market environment. In the 90s, execs who managed smooth earnings growth (against consensus earnings estimates) became rock stars in the business press. And for good reason.

Starting from about 1989, a Fortune 500 company that missed consensus earnings by a penny would lose 6 percent of its market value

Thomas King, in his wonderful history of accounting More Than a Numbers Game, calls this period the ‘EPS bubble’. EPS here means ‘Earnings Per Share’,

Welch was a master of massaging these numbers, as was every other lauded CEO of the period

This belief in EPS growth was so strong, in fact, that there were inefficiencies in the industrials sector that Welch dominated. In Commoncog’s Case Library we covered one person — Brian Jellison — who exploited this inefficiency to generational wealth. Jellison snapped up asset light, cash generative industrial companies, something he could only do because his competitors were so focused on copying GE. He eventually turned a 100 year old manufacturing conglomerate into a large software company.

The EPS bubble burst when accounting scandals came to light at the turn of the millennium (Quality of Earnings)

10 years is a long time for an effect to run. If you had a newborn when the fad started its hold on Wall Street (in 1989), your child would be 10 years old at its peak, and 15 years old for the effect to begin its decline. 15 years sounds similar, doesn’t it? It sounds like the period that we just left.

Knowing What You Can Do

I feel comfortable with Chingunde’s assessment of ‘incompetent leaders’, because cheap capital makes for bad accountability. But the more important thing is that what is true for software engineering management here is more broadly true for business.

In 2018, Rahul Vohra, the CEO of email app Superhuman, wrote a famous, oft-cited essay titled “How Superhuman Built an Engine to Find Product Market Fit.” I still remember the impact the piece had on the startup noosphere — for a number of weeks, even months, it was all anyone wanted to talk about. In 2025, Grammarly acquired Superhuman for an unimpressive sum, an ignominious end for the company. (2019-02-15) How To Measure Product Market Fit With Superhuman Founder Rahul Vohra

With the benefit of hindsight Vohra’s essay was most likely wrong. He had not cracked product market fit. The death of his startup was also likely a function of ZIRP ending … or maybe not; who can say — this is what is difficult about all of this.

Software engineering leader Will Larson has an essay that reframes this phenomenon wonderfully, titled Good Engineering Management is a Fad. Larson argues that what is seen as ‘good engineering management’ changes depending on the business environment.

of course we want leaders to fit the necessary patterns of today. Where things get weird is that in each case a morality tale was subsequently superimposed on top of the transition:
In the 2010s, the morality tale was that it was all about empowering engineers as a fundamental good.

There is one last way in which reading biography is accretive to business skill

You don’t have to work things out from first principles the way Anders did if you read the book. But if you didn’t read it … well, the odds are good that you would never work this out for yourself.

There’s a saying attributed to Naval Ravikant that goes “there’s no actual skill called business.” This is almost patently false. There are things you can do if you treat your business like a ‘system that you can engineer’. You will not learn these things if you believe the skill of business consists only of ‘marketing’ and ‘sales’ and ‘product’ and ‘hiring’ and that you must learn these things like going to the gym.

How to Use This?

reading business history matters for the following aspects

understanding the business cycle

understand if the ‘best practices’ you are learning are truly applicable across market regimes.

to know the full range of what may be done in the game we play.

It’s probably no accident that businesspeople who are very good at what they do tend to read biographies (or listen, attentively, to stories) as part of their information diet

At the end of the day this is one of the weirder things about this game we play. There are many, many aspects of business that is like weightlifting: you can really only learn sales, management, cash flow, marketing, operations, org design, or board selection through practice.

But in the long run, knowing what has come before (and what may come after) separates the great from the merely good.

Cover email:

The Shape of the Game We Play — This essay is ostensibly about learning business, but is actually about ZIRP

A couple of weeks back, a reader replied on Twitter and said that while he enjoyed reading business biography as much as the next person, he thought that learning business through biography wasn't really effective. “Reading books about weightlifting doesn’t shortcut actually hitting the gym

I think the two are different domains. Here’s an analogy. Let’s say that you move to a valley in a foreign land. You build a house with your bare hands, learning the skills of a mason and a carpenter and an electrician and a plumber. You build a beautiful house. All is good for nine years. But because you don’t read the history of the area or talk to the natives, in the 10th year a flood devastates the valley, destroys your house, and you die.
The thing about business is that you have capital cycles, and those are like 10 year floods.

This week's essay is about the weird things in business that you ideally want to learn through reading, not doing. But it's also an opportunity to reflect on the regime change that occurred after ZIRP ended in 2022.

In hypergrowth times, it was easy to be a good leader but equally easy to be a bad one. Shreyas has an excellent series of tweets describing an “Incompetent Leader.” There are multiple people I can think of that easily fit the description

The tweet thread doesn’t mention ZIRP, but it was an essential ingredient in that scenario. Now that we are post-ZIRP, I believe it will be harder for incompetent leaders to follow that particular playbook

Overall, I see this as a positive for organizations and the people in them.

The corollary, of course, is that these incompetent leaders have shifted to parts of the tech industry that is still flush with cash, since this means less accountability

Good Engineering Management' is a Fad — Will Larson has a wise reframing of the regime change: In each of these transitions, the business environment shifted, leading to a new formulation of ideal leadership.

Where things get weird is that in each case a morality tale was subsequently superimposed on top of the transition:

The conclusion here is clear: the industry will want different things from you as it evolves, and it will tell you that each of those shifts is because of some complex moral change, but it’s pretty much always about business realities changing. If you take any current morality tale as true, then you’re setting yourself up to be severely out of position when the industry shifts again in a few years, because “good leadership” is just a fad.

But I just wanted to call out Outcome Orientation as a Cure for Information Overload, which has continued to deliver results for me

The truth is that most of us have opinions on things that don't matter. We read things or listen to podcasts or have feelings about topics that have literally zero impact on any of the outcomes that matter to us.

Life is vastly simple when you have opinions about only the things that drive the outcomes you want.