Pet Theories

This week’s economist has two articles updating us on some windmills technofiles have been tilting at for a decade or so.

First is the health care industry. The article itself is a typically bland offering but, in fairness, the subject is tough to spice up. Health care, like insurance, is a human interaction business and innovation here is glacial.

My mother’s an occupational therapist in a rural area and she spends a lot of time traveling to peoples’ homes delivering care. I’ve learned from her that, in health care, mobile technology is a red herring. This is a solution in search of a problem.

Now, she’s on board in principle. It’s extremely hard to attribute the economic benefits of positive health care outcomes. Costs, however, are very easy to measure, so any countervailing force there is extremely welcome. But does it work?

Automating administrative records only really matters when you need to retrieve those records, usually fairly far into the future. A heavily discounted benefit.

The costs of implementation, however, are significant. To implement an ipad into my mother’s visits to her patients would require replacing pen and paper (with, I kid you not, carbon copies beneath it) with an ipad, a portable printer and keyboard. All while touring this heavily debilitated senior’s house and educating him/her and family. Not any time soon.

It’s always possible that some bonehead will legislate a technological revolution and massively inflate the relative price of health care but, barring that, we’re decades away.

Second is the media industry.

This problem is so strange, isn’t it? We all know where the business is going: on-demand media consumption packages across multiple channels. The problem is that we think of content companies in the wrong way. Much like insurance, the people who control everything the distributors, not the creators. These new online-related distribution models are direct competition for them.

Of course they’re resisting!

Until Netflix and Apple build enough scale to genuinely compete for original content, the model won’t change.

Porno leads the MSM: fewer distribution channels, smaller pie and less spend on overt promotion. In 50 years, viral distribution networks will be king (and free!).

And here I genuinely thought I was mailing in that last blog post.

I just wrote it a day early!

Genuinely not caring about pressure is perhaps what gives kids the upper hand in poker play:

But really, we don’t know what making $400,000 or losing $800,000 means, because we don’t have families or whatever. This blind spot gives us the freedom to always make the right move, regardless of the amount at stake, because our judgment isn’t clouded by any possible ramifications.”

That’s from the NYT.

And here’s Tyler Cowen on professionals vs amateurs. It’s hard to excerpt his short post:

Amateurism is splendid when amateurs actually can make contributions.  A lot of the Industrial Revolution was driven by the inventions of so-called amateurs.

In fields where risk is high and barriers to entry are relatively low, amateurs will dominate.

Here’s an awesome bit on politicians:

Policymakers need more of a sheer willingness to do the right thing, even if it means sacrificing reelection [depends also on knowing what the right thing is -DW].  Selection mechanisms, however, do not much favor that bravery.  For a sane, well-adjusted person, the job is neither fun nor well-paying, so the job attracts people who love being in office and thus who fail to do the right thing.

Suitability for any given job is, at best, evaluated on messy proxies for future performance. For many jobs, selection criteria have a zero (or even negative!) correlation to expected performance.

Often it is silly to fume about poor performance without evaluating the selection process.

Maybe you’re getting exactly what you asked for?

The Economist has a review of Michael Porter’s latest contribution. I skimmed it long enough to satisfyingly affirm my revulsion to ‘business’ as an intellectual discipline.*

A couple of years ago, I was considering opening a retail store and emailed a former marketing prof for a textbook recommendation.

He came through and, for the first time in my life, I genuinely read a damn textbook.

My god, what a load of crap.

Because I was looking for insight on, you know, how to actually manage a retail business, the book was useless. I read the thing in an hour – it was about 40% explicit filler (summaries, Q&A, indexes, case studies and graphics), 50% stealth filler (fluff  ‘filling ideas out’) and 10% real content.

Not much to actually learn but lots of useless junk you can memorize and immediately forget.

This is the classic High School BS Method. First you need  some idea, as fine-spun a thread as it may be. Then grimly stuff  it with the largest, foulest payload of BS you have time to get down. Gotta fill the page!

And it’s not just marketing – marvel at the bounty the ‘science’ of finance has reaped for the world!

For me, business education (hell, maybe ALL education) works like this: find a problem and try to solve it.

Your solution will probably fail, but try again. Maximize your chance at success  by asking people who have some relevant experience for advice.

Best case: work in teams and punish freeloading.

‘Ideas’ and ‘intelligence” are red herrings. Social intelligence matters (can you play with others?). Drive matters. Experience matters, but that’s only a function of social intelligence, drive and time.

I know that execution is boring, seems easy and doesn’t get people excited, but that’s actually the whole game.

Perhaps ironically, the version of this argument for the softest part of execution, people management, draws on Google’s experience:

Mr. Bock’s group found that technical expertise — the ability, say, to write computer code in your sleep — ranked dead last among Google’s big eight. What employees valued most were even-keeled bosses who made time for one-on-one meetings, who helped people puzzle through problems by asking questions, not dictating answers, and who took an interest in employees’ lives and careers.

Social intelligence and work ethic. The end.

*Drucker is excused from all this, of course.

I think it’s worth following up on this.

Over time, a poor grasp of macro trends will doom any business strategy, of course. But in the short term, success is more closely linked to incumbent competitive advantages.

What really intrigues me is that part of the economy so resistant to automation: social interaction.

It’s probably not an unfair simplification to say that economic growth is all about uncovering ways to routinize tasks. So it’s important that a routine task is not necessarily a simple task, at least to a human mind.

As legions of kids struggling through math class have realized, humans are not logic machines, we’re social machines. Computer brains were built to process logic while human brains were built (and trained!) to process social signals.

That we can do any logic at all is pretty cool. But mostly our processing routines are veiled, messy, parallel and unbelievably complex.

But wait, you say: computers have been around for, what, 50 years? And they’re already deriving the laws of physics! Took us millennia!

Perhaps, but the complexity of the the calculations involved in social interaction will baffle the most powerful computers for a long time still; like it or not, the highest form of intelligence is social intelligence. And it cannot be routinized.

Some professionals, like salesmen, are entirely concerned with social interaction. In these cases, the social intellect is king, of course.

I work in a sales business and we think nothing of the most skilled and experienced minds in my company gathering round to debate the implications of a few sentences in a client’s email. Like, literally for an hour or more. Business context, personality, politics, mood, the fucking weather that day. All have an effect.

Now THAT’s complex.

That’s why producers get paid more than actuaries in my biz. They may not have the fancy math, but they’re still smarter.

In any context in which you need to convince other humans of your quality, social intelligence is how you do it.

And that’s every context.