Rambling

Posted on by David Wright

NFL players are, individually at least, a specialized bunch. Opponents in similar roles typically look more alike than the rest of the players on their own teams. Football is possibly the sport with the most diversity of size and shape; indeed, it’s probably the only athletic home for a few of humanity’s body types.

A lot of these people are physiological ‘freaks’. It’s uncommon enough to find a guy that can run a 4.4 second 40-yard dash, but a guy that’s 6’6 and 250 pounds? Witness the prototypical Defensive End.

People love the narrative of the outlier, of course: the little guy that works hard, the fat guy that gets thin, the tall guy that’s surprisingly graceful. The fact is, they’re the lonely few who have risen above their peers in the giant majority just not built to be professional athletes.

Consider someone like Antwaan Randle El (good catches at the superbowl notwithstanding).

He’s not a freak, he’s a ‘tweener’. Been a quarterback,t been a receiver, defensive back, running back, all sorts of things. I imagine if you took a survey of coaches, asking about any of the measurable characteristics of an outstanding football player, he’d rank well.

Put him on a football team and you start scratching your head. What to do with the guy?

There are two possible interpretations, I suppose:

1.       Randle El has skills, but he doesn’t have the right mix of skills.

2.       Maybe what looks like talent isn’t talent and this guy’s a good looking dud. After all results matter and he ain’t producing results.

Randle El problems pop up all over the place. He’s probably in the wrong sport!

What’s the equivalent in the workplace?

*SMACK*

Posted on by David Wright

That’s the sound of my hand hitting my head.

Nick Rowe makes some interesting points (followed by Krugman) on economics education, which I’m slowly realizing did me a unforgivable disservice when I went through mine (formally).

Firms supply goods and people buy them. Economics is concerned with the problem of increasing total output, which is the quantity of good traded.

The constraint here isn’t demand, you can only push how much people can buy so far (it’s related to how much they can produce!). The constraint is supply: what we need are more firms/competition to drive down prices to sell more stuff.

So policies that aim to increase the amount of demand for products are doomed to very mediocre results. These are things like tax cuts, tax increases (ie government spending) and inflationary monetary policy.

Except now is different.

The idea is that, during this past recession, people/firms were holding onto money for some reason. Because they have to repay debt? Because they expect things to get worse in the future and so are saving against that outcome? Maybe…

Scott Sumner is awesome here.

Debts are paid in nominal dollars. Salaries are paid in nominal dollars. If firms start worrying they’ll have fewer nominal dollars next year than this, they’ll cut back. If they fear this because their business just sucks, so be it, they deserve to go out of business. But that kind of thing doesn’t happen to EVERYONE at ONCE.

That’s the difference.

The New Manufacturing

Posted on by David Wright

I think of the insurance business (and banking for that matter) as a process-driven technology industry, like manufacturing.

We have a very similar value chain, with engineers pulling costs out of the system and slowly tailoring products to peoples’ uses. Over time, the systems employ fewer, more skilled people and the products become ever more commoditized.

Value and innovation are not revolutionary in these businesses, but incremental, and brands are a key differentiator among the otherwise indistinguishable elite few operators.

The most powerful in the business are those most gifted salesmen that can make a commodity feel less like one, all while quietly making it more so.

Oral History of Niche Businesses

Posted on by David Wright

I work in a niche industry. I’ve gotten used to, say, wondering through the business section of a bookstore and seeing nothing particularly relevant to my work in a specific way.

Now, I know I’m in a niche business because nobody’s really ever heard of my business, but what I’m wondering is whether everyone shares this feeling when walking through the business books section.

The economy is a pretty specialized place; doesn’t it have to be? It’s so easy for the best to scale up that most people are driven to the extremes. Farmers become labourers become shopkeepers become Walmart-etteers, back-office administrators, bloggers and frustrated actors. And welfare jockeys, of course.

Ok, so there’s a greater disparity of experience. It hasn’t translated into very much diversity in business books, though.

Homer (the Greek, not the Simpson)  wouldn’t feel out of place with how business knowledge is transferred these days: orally, experientially, heavy with context, narrative and ‘you had to be there’ jokes.  That’s because most of what we do these days is professional socializing: the main difference between industries is the jargon.

Business books publishers get this and so don’t bother with the jargon. They cut straight to it and talk about leadership, networking, social intelligence, reading others, etc. The problem is that writing strips away too much context; social education cannot be scaled.

Not to say you can’t learn from words on a page. It’s just that there’s a lot to learn and supply is hard to find: there are only a few authors in any generation that can rise above the horde of hacks dashing themselves against the wall of literary achievement. It gets easier with interaction and some human touch, but that scales poorly too. At its worst (and it often is) the lecture is little different than reading a book. It takes a helluva teacher to really connect with a large group.

So we rely on mentor relationships to build human capital. But what if you pulled the short straw and your mentor(s) suck?

Well, this isn’t in keeping with the ‘you can do anything’ narratives of our society, but you’re just screwed.

Sorry.

Collaborarion Networks (and Entrepreneurship)

Posted on by David Wright

Just read Michael Nielsen’s article on the “Future of Science“, which is really about how the Culture of  The Science Profession is proving incompatible with the Culture on Online Collaboration. Shame.

Add science to the list of professions requiring collaboration, networking and communication skills to succeed. You know, like every other human pursuit in the world.

It seems ironic to me that the people dedicating their lives to the progress of knowledge struggle to adopt the latest products of human ingenuity. As Michael says in the article, the scientific journal process is a rigid institution that is proving tough to crack.

Culture drives technology, not vice versa.

(The thought struck me that companies are simply collections of collaboration networks. A new company, to succeed, needs to be an outstanding collaboration network, perhaps a novel one. Want to start a company? Well, figure out a new or interesting combination of people to work on a problem. Or find a common set of team skills doing the same work cheaper.)

Also, collective success is much more easily dispensed shared in companies. In the aggregate, stock options have produced more happiness than Nobel Prizes (the prizes themselves, I mean; obviously the ideas that win the prizes are a pretty big deal).

But I think that we tend to overestimate the impact that social media can have on the professional world. It’s great for sharing photos or mocking your friends, but is it really (like, really) going to change how we interact professionally?

Culture Rules

Posted on by David Wright

Saw a lifetime achievement award given last night. Good speeches, decent food and a borderline bizarre biographical video of the recipient.

The one thing that really sticks with me is how there are four or five really prominent CEOs that all ‘grew up’ together in the business. Can’t be a coincidence.

So what’s the explanation? Talent? Sure. Social dynamic of peer competition? Probably. But surely those things are common enough.

The thing that I think has to have been truly special is the culture of their common employer. They are the product of their environment. So what is someone to do who finds himself in a mediocre environment? How does a leader create such an environment? Do all leaders want to create such environments?

The leaders of tomorrow are being groomed at an extraordinary organization somewhere. Almost every other organization is busily destroying or limiting its talent. Why? How?

Robin Hanson Stuff

Posted on by David Wright

I’ve been listening to Robin and Russ talk and the flabbergasted first impression of Robin’s ideas is starting to wear off. I can just about start to think clearly about this.

Robin’s basic idea is that there have been about two technological revolutions in human history: farming and the industrial revolution. Following each of these, the pace of economic growth increased by an order of magnitude.

What, he asks, could cause the next such revolution and how will the economy look following it?

The farming revolution was all about food production. Suddenly we can produce a lot more food, a lot more reliably than before. Self-sufficiency diminishes and the manufacturing and service sectors are born.

The industrial revolution is pretty tricky to summarize. Suddenly productivity advance exploded (relative to before). Capital substitutes for labour in a meaningful way and, again, the jobs of the past need far fewer people. That seems a horribly inadequate explanation; maybe the vocabulary of economics just isn’t up to the task here. I’ll move on.

Robin’s next insight is that most of the economy is now in the service sector. To increase growth rates by another order of magnitude, we’d need to find a way of making human interaction more efficient. That’s a puzzler.

The short version of the rest is that cheaply replicated robots will take over these tasks.

The trick is that there is something necessarily human about much of the service industry; so, if robots are going to do it, they’d need to be more or less indistinguishable from humans. There’s an embarrassment of Sci-Fi examples here. My favourite is Battlestar Galactica.

Robin makes some points about the science of this, the upshot of which is that the most likely way we get there is by scanning and emulating the human brain. The idea is that we then get lots of replicas of particular individuals. To paraphrase a favourite meme of mine, the logic goes something like this:

1. Copy individuals’ brains

2. Enslave the copies

3. ????

4. Everyone gets rich.

To me, Robin rather casually brushes off the nastier historical precedents of slavery. He thinks the results of this process is a subsistence wage for everyone (really? we’ll stand for that?) and outrageous returns to capital for those that own something. Dude needs to read 19th century reactions to Marx to see how people will jive with THAT little nugget.

I’d quibble with the political economy here and say that we’d probably have a ridiculous social safety net and society becomes more of less socialist if suddenly everything were super-duper cheap. Welfare for all!

Hard work thinking about this without turning it into a TOTAL bullshit slinging contest. Too many assumptions. I understand why Tyler Cowen likes the guy so much.

He’s original!

Tech Trends

Posted on by David Wright

I’m beginning to think that there are only hardware trends in tech (faster, cheaper) and social trends in software.

My favourite question to ask people in tech is: “what about your job could not be done 15 years ago?”. Most of their answers have to do with standards (common protocols emerging) and organizational will towards technological solutions (“my boss 15 years ago didn’t understand the benefits and the employees didn’t have the skills to implement”).

This says to me that innovation is not cross-pollinating between software industries. The fact that google and 4square exist doesn’t have any direct implications for insurance company efficiency.

To understand where the next breakthrough will come, take today’s technology and add higher median computer familiarity within an organizational system.

The days have arrived where back offices of companies are populated by middle-aged men and women who do nothing but administer computer systems all day. That’s a pretty interesting development.

So, what’s next?